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Sturm Ruger Sees Record Gun Orders On Election Fears
04/01/12 01:33 PM
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Sturm Ruger Sees Record Gun Orders On Election Fears
By VANCE CARIAGA Posted 03/29/2012
Gun maker Sturm Ruger (RGR) announced last week it received 1 million orders in the first quarter and wasn't taking any more until it could fill what it had.
"Despite the company's continuing successful efforts to increase production rates, the incoming order rate exceeds our capacity to rapidly fulfill these orders," the company said in a press release.
The gun business is booming. Analysts and retailers say it's driven by the prospect — fear to some — that President Obama will be re-elected and crack down on gun ownership.
Last month, National Rifle Association President Wayne LaPierre said the administration's low-key approach to gun issues was "part of a massive Obama conspiracy to deceive voters and hide his true intentions to destroy the Second Amendment during his second term."
Not all analysts take that view, however.
Strum Ruger makes pistols, revolvers, rifles, shotguns and accessories primarily for use in the U.S. It sells into several markets, including law enforcement, the military, sporting goods and home defense.
That last category has been the primary driver of Sturm Ruger's recent surge in stock price and financial results, analysts say.
"We have continued to see elevated demand in concealed carry/personal protection/self defense, an area in which (Sturm Ruger) has excelled, as well as a recent resurgence in the popularity of tactical rifles," KeyBanc analysts said in a February note.
'Favorable Tail Wind'
They forecast the firm will benefit from a "favorable tail wind," but fear margins have peaked.
Sturm Ruger has reported four straight quarters of accelerated sales growth. Revenue expanded 45% last quarter. Earnings have risen at least 80% the last two quarters.
Sturm Ruger's stock price hit an all-time high of 50.59 Monday, a few days after the company said it would stop taking orders for more guns until it clears a huge backlog.
Obama had a track record as an Illinois legislator of backing gun control legislation. But some say fear that Obama will crack down on gun ownership is overblown, says Bret Jordan, an analyst at Avondale Partners.
"There's not much evidence that Obama has been a threat to Second Amendment rights," he said. "I don't think there's much prospect of him making a run at the Second Amendment in a second term because he still will be dealing with a Republican Congress."
But the image of Obama as anti-gun persists. In an ironic twist, that image has been great for business.
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John Stewart
Editor - 4x4Wire.com
4x4Voice
Board Member BlueRibbon Coalition
CA4WDC Resources Consultant
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