Americans Are Loading Up On Guns…
‘Go ahead punk, make my day…’
The quote made famous by Clint Eastwood in the 1971 movie, Dirty Harry, is most likely being repeated by Smith & Wesson (SWHC) CEO James Debney this morning.
Why?
Debney’s company announced fiscal first quarter 2013 earnings after the close last night. And after seeing the results, it’s fair to say his company blew away analysts’ estimates much like Dirty Harry blew away bad guys.
The firearms manufacturer reported Q1 sales of $136 million- up 48% over the same period last year. The company also reported net income of $18.9 million, or $0.28 per share. Compare that to the same period last year and you’ll find earnings per share exploded by an eye-popping 600%.
Not surprisingly, Smith & Wesson’s share price is up nearly 20% this morning due to the remarkable results.
But record quarterly revenue and earnings is just part of the story…
Smith & Wesson expects second quarter sales, which is usually a seasonally weak period, to come in between $130- $135 million. If the company hits those lofty estimates, it would represent 40% year-over-year growth.
And that’s not all.
Smith & Wesson raised their full-year 2013 sales guidance to an estimated $530- $540 million. That increase would represent full-year revenue growth of just over 30%!
What’s going on here?
Many modern, cutting-edge technology companies can only dream about 30% yearly growth. How can a company manufacturing century old technology like Smith & Wesson report such remarkable numbers?
It’s simple. Americans are buying guns at a staggering pace!
The question investors should be asking is… why?
If gun sales continue growing so rapidly, it’s worthwhile for investors to take a closer look at this trend. After all, there are numerous ways to capitalize if it looks like its growing gun sales are here to stay.
So what’s the deal, why are Americans buying guns hand over fist?
In my opinion, the answer is fairly obvious… people are worried.
After the tragic Colorado theater shooting and the recent shootout in front of the Empire State Building, Americans are anxious. They’re concerned about their safety on the streets, as well as their well-being at home.
And there’s something about a gun that says, “Go find somebody else to pick on…”
Recent FBI background check data supports the growing gun trend. In fact, instant criminal background checks required for firearms purchases came in at 1.5 million in August… up 17% over June. What’s more, background checks are at all-time respective monthly highs for June, July, and August 2012.
Clearly, prospective owners are flocking to the nearest gun store. And unless violent crimes suddenly disappear, it’s likely this growing gun ownership trend continues.
So how do you capitalize on a fully armed America?
Gun manufacturers like Smith & Wesson and Sturm Ruger (RGR) are the most direct way investors can play this trend.
But it’s not the only way…
Don’t forget sporting goods stores like Cabela’s (CAB), Big 5 Sporting Goods (BGFV), and Dick’s Sporting Goods (DKS). All of these companies sell guns and may see their bottom lines bolstered as gun ownership surges.
***Editor’s Note*** It’s not too late to buy into the gold and silver mining stocks Robert recommended yesterday! The good news is they’re still trading for just a few bucks a share. Click here to check out Robert’s newsletter… and to get the names of these 2 junior miners!
Until Next Time,
Justin Bennett
Category: Stocks
