Companies and Brands

Guns Everywhere Petition Highlights Rosy Manufacturer Outlook


Last week, a petition appeared on collecting signatures for the advocating of open carry gun rules at the GOP Republican National Convention in Ohio in July. Though it was denied in the end, more than 50,000 individuals signed the petition. That the Secret Service would ever allow an open gun policy at an event like this was always highly unlikely, and it probably never would have happened regardless of petition support volume. There are wider implications at play here, however.

Ohio is an open carry state, but just as with all open carry states, venues like the RNC have the right to impose gun-free zone rules on their premises. What this petition is pushing for, when looked at from a longer term perspective, is the elimination of these zones and — by proxy — a carry everywhere policy. Obviously such a policy has safety, ethical and political implications, but it also brings another party into play — gun retailers.

The second amendment has played a large role in the U.S. presidential run-up to date, and it looks set to continue to do so regardless of which Republican ultimately takes the nomination. With this sort of media attention, fueled daily by coverage of the sort of civilian display of gun support a petition like this illustrates, can only be good news for gun retailers. In other words, a guns everywhere policy likely won’t come into force anytime soon, but just the suggestion of it, coupled with the spotlight it draws as nominees like Donald Trump and Ted Cruz repeatedly highlight the key role a right to bear arms plays in their campaigns, and will play in their terms if elected, is enough to boost the big names in the space.

Consider the two largest gun manufacturers in the United States, Smith & Wesson Holding Corp (NASDAQ: SWHC) and Sturm, Ruger & Co. (NYSE: RGR). The U.S. presidential race really started to heat up toward the end of last year. From November 2015 lows to March 2016 highs, Smith & Wesson is up 71%. Sturm is up just shy of 60%. The gains likely have been bolstered by the seemingly increased threat of terror in the United States across the period, with a host of shootings domestically and both the Paris and Belgian ISIS incidents, but the politically fueled impact is undeniable.

Is there an actionable takeaway, here? Yes. It’s still early days in the grand scheme of the presidential run, and the latest carry everywhere petition is set to be just one of a flurry of pro-gun actions from the Republican candidates and public between now and November. The situation in the Middle East and Europe looks likely to give gun advocates the edge from a public sentiment perspective, and in turn, give the Republican candidates the edge in any type of pro/against arms debates. This is only going to fuel growth in gun manufacturers further.

For a less direct exposure than gun manufacturers offer, consider Wal-Mart Stores Inc. (NYSE: WMT), the biggest retailer of guns in the nation. Perhaps this is one of the reasons why Wal-Mart shares have performed so well lately.

By Matt Winkler

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