Guns are one of the most controversial topics of the day — so much so that many investors may understandably avoid even the best gun stocks.
At the same time, we’re still seeing a surge in gun sales. With so much uncertainty in the world, Americans are arming themselves for their own safety, and over concerns that guns could be tougher to purchase in the future. In fact, according to the FBI, we’ve seen years worth of gun sales surpassing 1 million a month.
While the topic is wildly controversial, I’ve highlighted a few of the best gun stocks.
|SWBI||Smith & Wesson||$14.38|
|RGR||Sturm, Ruger & Co.||$65.69|
|AOUT||American Outdoor Brands||$7.94|
|BGFV||Big 5 Sporting Goods||$12.47|
Smith & Wesson Brands (SWBI)
Shares of Smith & Wesson Brands (NASDAQ:SWBI) slumped recently slumped on softer demand and earnings. Fourth-quarter net sales were down about 44% to $181.3 million. Gross margins slipped to 39.8% from 45.1% year over year. GAAP net income was 79 cents per diluted share, as compared to $1.70 per share in the year-ago quarter.
While numbers were down year over year, they still beat expectations. Revenue of $181.3 million was still ahead of estimates for $168 million. Adjusted profits of 82 cents was also above expectations for 57 cents. The company also just raised its dividend by 25% to 10 cents, which was payable July 21, 2022 to shareholders of record, as of July 7, 2022. SWBI also carries a current dividend yield of 2.8%.
CFO Deana McPherson further noted in the earnings release, “Our balance sheet remains strong with $120.7 million of cash and no debt, and we expect to continue generating strong cash flow for the foreseeable future.”
Sturm, Ruger & Co. (RGR)
Sturm, Ruger & Co. (NYSE:RGR) manufactures and sells firearms under the Ruger name in the United States. It operates through two segments: firearms and castings.
RGR is in the same boat as Smith and Wesson when it comes to sinking shares. With RGR, earnings were also down year over year. Net sales came in at $166.6 million, down 10.7% from last year’s measure of $184.4. Diluted EPS of $1.70 was also down, off 21% from $2.16 year over year.
While that’s not great, 2021 was a stellar year for the company. It also does carry a healthy dividend yield of 5.2% at the moment.
Vista Outdoor (VSTO)
I’d also keep an eye on oversold shares of Vista Outdoor Inc. (NYSE:VSTO).
Over the last few weeks, VSTO stock dove from a high of about $40 to $27, but don’t write this one off either. In its most recent quarter, sales shot up 36% to $809 million. Gross profits were up 58% to $287 million. EBITDA jumped from $74 million to $153 million. Diluted EPS jumped to $1.93 from $1.11 year over year as well.
“Following two consecutive years of record performance, we continue to experience strong demand across our diverse portfolio of leading brands, driven in part by lifestyle shifts to spending more quality time outdoors,” said Sudhanshu Priyadarshi, CFO, as quoted in a company press release.
“Our fiscal year 2023 guidance reflects these favorable consumer trends while also taking into consideration headwinds related to inflation and supply chain dislocation that we expect to continue for the foreseeable future. That said, we are in a strong financial position with a solid balance sheet and a net debt leverage ratio less than 1.0x following five acquisitions in FY22 as well as ample liquidity,” added the CFO.
Ammo Inc. (POWW)
After finding strong support around $3.75, shares of Ammo Inc. (NASDAQ:POWW) ran to about $4.75. From here, if AMMO stock can break above resistance, it could potentially test $5 a share, near-term.
Earnings have been just as impressive.
Net revenues, for example, were up 285% to $240.3 million. Gross profit margins shot up to about 37% from 18%. Adjusted EBITDA jumped 832% to $75.5 million from $8.1 million. Diluted EPS of 27 cents soared 293% from a loss of 14 cents. Adjusted EPS was up 651% to 53 cents from just seven cents.
“Fiscal 2022 was a transformational year for AMMO, as we more than tripled our sales of ammunition while becoming the world’s largest online marketplace for firearms through our acquisition of GunBroker.com,” according to Chairman and CEO Fred Wagenhals.
“As impressive as this past year has been, we believe the opportunities in front of us are significant, both with the opening of our new manufacturing facility in July and several new revenue initiatives in our Marketplace business.”
American Outdoor Brands (AOUT)
American Outdoor Brands’ (NASDAQ:AOUT) 2022 chart is ugly.
After topping out around $36, the stock plummeted to $7.94 a share. Nowadays it’s trading at less than half of sales, and at a price/book of 0.51. The company recently posted full-year net sales of $247.5 million, down 10.5%.
However, “On a two-year basis, net sales grew 47.9%, reflecting increases in both e-commerce and traditional sales channels,” according to a company press release. Full-year gross margin was 46.2%, higher than the 45.8% for the prior year.
However, don’t count the stock out just yet. B. Riley analyst Eric Wold recently increased the firm’s target price to $44, with a “buy” rating. Wold cited demand for “outdoor products and shooting sports accessories” as a catalyst, as noted in a Seeking Alpha article.
Olin Corporation (OLN)
After diving from a high of about $67 to $46, shares of Olin Corporation (NYSE:OLN) appear to have bottomed out. From Thursday’s close of $49.59, we’d eventually like to see the stock refill its bearish gap around $58, initially.
Granted, this is a chemical stock. However, under its Winchester Brand, Olin produces and sells sporting and small-caliber military ammunition.
Earnings have been solid. In its second quarter, OLN reported revenue of $2.62 billion, well above last year’s mark of $2.22 billion, and net income of $422.1 million, up 18.6% year over year.
Diluted EPS came in at $2.76, up from last year’s mark of $2.17.
Big 5 Sporting Goods Corp. (BGFV)
Big 5 Sporting Goods Corp. (NASDAQ:BGFV) is another solid way to trade guns.
After falling from about $19 to $10.39, the stock is starting to slowly recover. From a current price of $12.47, I’d like to see the stock test $13.50 resistance, initially. From there, we’d like to see it test $15.50.
Earnings haven’t been too shabby. For its first quarter, the company posted EPS of 41 cents, which beat estimates by four cents. Sales came in at $241.98 million, which was down from $272.8 million year over year.
Big 5 Sporting Goods also carries a dividend yield of 8.1% at the moment.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.