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With Terror Attacks and Violence on the Rise, Guns Stocks on the Rebound

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Data collected by IHS Jane’s Terrorism and Insurgency Centre (JTIC) showed that non-state armed groups carried out more attacks in October 2016 than any other month in the past year. According to IHS Markit:

Globally, 2,662 attacks were carried out in October 2016 — an average of 86 attacks per day. This represents a 59 percent rise in the daily average number of attacks compared with September 2016, which saw fewer than 1,000 attacks for the month. In the preceding 12 months, JTIC recorded an average of 59 attacks per-day.

Typically, prominent incidents in the United States like the tragic killing of 50 people at an Orlando, Florida, nightclub earlier this year and the shooting in San Bernardino, California, almost a year ago have a predictable effect on the stocks of gun makers. While many of the attacks in October took place in Syria and elsewhere in the Middle East and North Africa, in the final three weeks of the month Smith & Wesson Holding Corp. (NASDAQ: SWHC) traded up more than 4%, while the share price of Sturm Ruger & Co. (NYSE: RGR) rose about 10%. Ammunition maker Vista Outdoor Inc. (NYSE: VSTO) traded up less than 4%.

Note that this was before the results of the presidential election were known. In the days after Republican candidate Donald Trump was declared the winner, shares of Smith & Wesson and Sturm Ruger dropped sharply — more than 20%.

Short sellers have piled into these stocks too. Shares short in Sturm Ruger surged more than 36% to 2.25 million in the first two weeks of this month, and short interest in Smith & Wesson jumped more than 26% to 11.62 million. Vista Outdoor saw its shares short increase more than 25% as well.

Yet, as the Trump administration begins to take shape, and with the incidents of violence and hate crimes in the United States reportedly on the rise, the share price of these guns stocks has begun to rebound. Both Smith & Wesson and Sturm Ruger have recovered more than 12% since their post-election lows, while Vista Outdoor is up more than 6% in that time.

24/7 Wall St. recently took a look at the violence in America and at America’s murder capitals.

Smith & Wesson closed most recently at $24.00, in a 52-week trading range of $18.14 to $31.19.

Sturm Ruger stock closed at $53.40, in its 52-week range of $47.15 to $78.09.

Vista Outdoor closed at $40.24 on Tuesday. Its 52-week range is $37.00 to $53.91.

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