In the past few quarters, the demand for ammunition and guns has increased across the US.
It was surprising to see a lot of ammunition stocks outperform some of the biggest tech stocks in the market in recent times. The new US administration led by President Joe Biden is a big supporter of gun control. Especially, Vice President Kamala Harris has much faith in the ammunition market. And she would love to work hard on achieving the Second Amendment. This will surely boost the gun market and help the ammunition stocks to skyrocket.
Why should ammunition stocks be a long-term investment option? As we know that the social and economic crisis has begun all over the world. And the global pandemic has aired such crises. Moreover, the killing of George Floyd was a big turn for the US community to be driven into social crises. So, people are insecure about their privacy and security and for protection, the demand for guns has spiked in the past few months. Moreover, people are spending more time in recreational activities—more. So, let’s see which three ammunition stocks are best for the long-term investment.
Sturm, Ruger (RGR)
Sturm, Ruger (RGR) is a US-based firearm manufacturing company, which has steadily grown over the past five years. RGT stock prices are usually aligned with a company’s financial performance in the long-term, which makes it a good long-term investment.
Since bottoming out at $35.54, RGR shares skyrocketed to as high as $90.74. The stock has pulled back to $68.34, which nears it to the buy point and could you big bucks in the long-term.
The company is set to announce its fourth-quarter earnings report on Feb. 17, 2021. It’s anticipated that RGR would likely have a strong quarterly outcome, which makes the stock have an upside of 17%.
In Q3, the company reported net sales of $145.7 million and diluted EPS of $1.39, which was massively above compared to last year’s $95 million and $0.27, respectively. With all the bulls on the RGR side, the company stands a solid chance to grow in both the short and long-term.
Vista Outdoor (VSTO)
Vista Outdoor (VSTO) is a well-known firm that manufactures shooting sports products and other sports goods. VSTO stock has jumped from the lows of $6 to $36.23, as we write this. In early 2020, when the market started to become more uncertain, surprisingly, VSTO shares began to push higher—thanks to increasing demand for guns.
In last 2020, Cowen analyst Gautam Khanna upgraded the VSTO stock to an “outperform” rating with a price target of $33. He highlighted that the stock is influenced by the increase in outdoor recreation, Biden’s presidency, and the global pandemic. Moreover, the earnings were also impressive.
Recently, the company reported its third-quarter results. The CFO Sudhanshu Priyadarshi highlighted that the growth during the surge has allowed the company to further gain share, reach new levels of influence and buying power, reduce debt and build cash.
The gross profit soared up to $164 million, which reflects a rise of 84% year-over-year. While the adjusted net income was $62 million, resulting in adjusted earnings of $1.03 per share, up from $0.21 per share in the last quarter. Vista Outdoor (VSTO) has a strong balance sheet with $104 million in free cash flow and $294 million year-to-date. With the growing trend and strong financial performance, Vista seems a good bet in the long run.
American Outdoor Brands (AOUT)
American Outdoor Brands (AOUT) is a leading provider of outdoor products which includes hunting, shooting, personal security, and defense products. The company is growing with the continuous surge in demand for outdoor hunting and shooting products.
AOUT stock has been impressive in the market jumping up to $23.31 from $14 in late 2020. The company recently reported second-quarterresultswhich were on a higher side.
The company’s net sales were $79.1 million, up by a whopping 65.7% year-over-year. While the gross margins improve by 690 basis points to 46.9%. The company has been working hard on its e-commerce channel and it has started to see the outcomes, already. The traditional channel sales soared by 34.3%, whereas, the e-commerce sales surged over 213.4%. This is amazing for AOUT as we head into the era of the digital world.
American Outdoor Brands (AOUT) has nearly $100 million in available capital to support organic growth and potential future acquisitions. Thus, it expects the fiscal year 2021 to end on a higher note.
