Midday Market Minute: Gun Industry Thrives in Face of Ban Proposal

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Gun stocks rose Wednesday, even as President Obama called on Congress to pass an assault weapon ban.

The stock prices for Smith & Wesson Holding Co. (SWHC) and Sturm, Ruger & Co. (RGR) rose about 4%. The stock for Sturm, Ruger has risen 13% in the month since the shooting at a Newtown, Conn., elementary school that left 20 children and six educators dead.

Gun shop profitsRetailers that specialize in guns have also done well. The stock price for Cabela's (CAB) surged 6% on Wednesday and has gained 20% over the last month. Dick's Sporting Goods (DKS) notched up slightly, and has gained 6% over the month.

Obama issued the call for the assault ban as part of a broad response to the Newtown shooting.

"Congress should restore the ban on military style assault weapons and a 10-round limit for magazines," the president said. Obama was referring to a 10-year ban that expired in 2004, which limited the capacity of magazines and restricted military-style features on semiautomatic rifles.

But the specter of a potential ban in the wake of mass shootings around the country has prompted gun enthusiasts to stock up on the weapons that may some day be denied to them.

"Consumers are flocking to stores to purchase certain types of firearms, including assault rifles, in fears of some type of ban going forward," said Rommel Dionisio, gun industry analyst for Wedbush Securities. "It's people rushing to buy them before they're banned."

Dick's said last month that it has suspended sales of assault rifles.

Smith & Wesson and Sturm, Ruger manufacture a wide variety of firearms, including the semiautomatic rifles that are known various as assault weapons or modern sporting rifles.

There are many other non-public companies that manufacture semiautomatic rifles, including Bushmaster Firearms International, which makes the rifle used at the Newtown shooting and also a recent shooting in Webster, N.Y., where a convict burned down houses and then ambushed and killed two volunteer firefighters.

Such a ban, if it passes, would also impact manufacturers of high-capacity magazines. They include the Beta Company, which makes 100-round drums, and SGM Tactical, which produces 30-round and 100-round magazines.

High-capacity magazines face a potential ban because they were used by Adam Lanza in the Newtown shooting and by James Holmes, suspect in a mass shooting last year at a movie theater in Aurora, Colo.

Obama acknowledged that he faces serious opposition in trying to get an assault weapon bill passed by a Republican-controlled House.

Even as Obama spoke, thousands of gun industry members packed into the SHOT Show -- an annual trade show -- in Las Vegas. The show is owned and sponsored by the National Shooting Sports Foundation, an organization based in Newtown, less than two miles from the site of the Sandy Hook school shooting.

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81 Comments

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Davie2743

The eventual goal is to destroy the gun industry and make almost all weapons illegal. They are starting with the AR rifles just to get traction once they successfully get States to follow NY they will try to pass more draconian gun laws. A lunatic gets a hold of a gun wipes out over two dozen people and huge portion of legal gun owners have to forfeit their gun rights. This is the mentality of some people we send to represent us in Washington and you wonder why there is such division and hatred in the U.S. Many gun shy States are now disinvesting their pension funds from any company that makes guns and ammunition.

January 18 2013 at 8:24 AM Report abuse rate up rate down Reply
MARLEYSGHOST

THANK YOU PREZ FOR THE INCREDIBLE BOOST IN FIREARMS SALES AND THE INFLATED PRICES OF MAGIZINES ITS DOING WONDERS FOR THE ECONOMY THE SECOND ADMENDMENT IS A SACRED TRUST FROM OUR WHITE FORFATHERS WHO BELIEVED IN SMALL GOVERMENT AND BEING PREPARED FOR ANYTHING THEY DID NOT BELIEVE IN LARGE UNCONTROLED SPENDING NOR FORGION AID , TELLING OTHER COUNTRIES HOW TO CONDUCT THEMSEVES THE ONLY THING THEY TOLD OTHER COUNTRIES WAS TO STAY OUT OF OUR BUISNESS AND WE WILL STAY OUT OF OUR...THAT IS AMERICAS PROBLEM NOW WE INVOLVE OURSELVES IN MPLACES WE HAVE NO BIZ IN WE TRY TO INPOSE OUR WILL AND OUR WAY OF LIFE ON PEOPLE TO HAVE NO ASPECT OF OUR WAY OF LIFE NOR DO THEY WANT OUR WAY OF LIFE ! WHAT GIVES US THE RIGHT TO DO THIS ? WOULD WE WELCOME THEIR INVOLMENT IN OUR WAY OF LIFE ? HELL NO WE WOULD NOT !SO WHY SHOULD THEY ? LEAVE THE SECOND ALONE AND ALL OTHER ONES FOR THAT MATTER ...THANK YOU

January 18 2013 at 1:24 AM Report abuse +1 rate up rate down Reply
ktonyjames

Gun manufacturers gave the NRA about 71 million in contributions and grants and then the NRA gave all our wonderful politicians over 18 million in 2012. Other than our military and police, I don't know anyone that I would want to own an assult weapon and high-capacity magazines. Handguns have been doing a wonderful job of killing our citizens for several years now. People should check the reasons why a shooting occurs...drugs, robberies,angry husbands or wives and in some cases road rage. Too many people lack tolerance of others and our justice system is too lenient on offenders. But that's my viewpoint.

January 17 2013 at 11:00 PM Report abuse -2 rate up rate down Reply
ao041044

If the American people had flocked to the polls in the same numbers as are flocking to the gun stores, another hoax would have been unmasked. And that one would be heading home to Cicero in a few days.......

January 17 2013 at 10:31 PM Report abuse +1 rate up rate down Reply
dwood69743

It is beyond my ability to understand why and how the gun fanatics think that having more guns around will keep gun deaths down but I guess that that is just more proof of Darwin's evolution..... Survival of the fittest
The likelihood of someone being killed by a gun if they own one is 22 times that of someone who doesn't.

Also, someone pointed out that if we all had guns around when we were in our 20's many of us would have regretted using them (suicides and broken hearts).

January 17 2013 at 7:39 PM Report abuse -4 rate up rate down Reply
3 replies to dwood69743's comment
Sped Man

Government wants to reduce the number of guns off the street by banning them. Just the mention of a ban has caused hundreds of thousands to run to the stores to buy guns. If they really wanted to reduce the number of guns on the street they should have kept their mouth closed and done nothing. Now there are hundred of thousands of new firearms on the streets. Good job La Bama!

January 17 2013 at 6:36 PM Report abuse +2 rate up rate down Reply
vtmilitia

Twenty years ago the firearms industry was considered a mature industry and not a good investment. Thank you President O'Bama for all the stimulous.

January 17 2013 at 6:28 PM Report abuse +3 rate up rate down Reply
1 reply to vtmilitia's comment
ccdae5

yup

January 17 2013 at 9:24 PM Report abuse +2 rate up rate down Reply
HELLRAISER

Ooops wrong stocks.

January 17 2013 at 5:27 PM Report abuse +1 rate up rate down Reply
hazel

just wait til the stock goes way down .watch em cry.

January 17 2013 at 5:06 PM Report abuse -2 rate up rate down Reply
crimeslawyer

Sad commentary. "We the people" are afraid of our own government.

January 17 2013 at 4:53 PM Report abuse +3 rate up rate down Reply