Following a recent string of gun-related tragedies over the past year, few people were surprised by President Obama’s efforts to enact legislation aimed at reforming the nation’s gun laws.
Of course, equally unsurprising was the deep division of opinions regarding both the effectiveness and necessity of such legislation, which included a proposal to ban some semi-automatic weapons resembling military assault rifles. In addition, the bill had also recently introduced a number of amendments, the most significant of which aimed to expand background checks for gun buyers at firearms shows and on the Internet.
As a result, prices for both firearms and ammunition have spiked over the past few months along with demand, as worried consumers began to stockpile the products.
Sporting-goods retailer Cabelas Inc (NYSE:CAB), for instance, noted a 12% year-over-year increase in comparable-store sales last quarter, largely on the heels of a “surge in the sale of firearms and ammunition.” What’s more, the outfitter also stated that more than one in five firearms purchasers last quarter were to brand-new Cabelas Inc (NYSE:CAB) customers, indicating just how many folks came out to buy guns and ammo before any new laws might have made it more difficult.
Meanwhile, Winchester ammunition manufacturer Olin Corporation (NYSE:OLN) has benefited from a relentless upward trend in ammunition purchases, which it says began the Saturday before Election Day. As of the company’s most recent quarterly results, Olin management bluntly stated that the demand has only been “limited by product availability.”
Sure enough, anyone who’s tried to purchase ammunition recently is well aware of just how hard it is to find and — if you can find it — just how fast prices have risen as a result of the demand. That of course, is why Cabelas Inc (NYSE:CAB) currently offers the following disclaimer on the firearms and ammunition page of its website:
Because of extraordinary demand, Cabelas Inc (NYSE:CAB) complete line of firearm accessories, ammunition, and reloading supplies may not be shown here. Only in-stock items are displayed. Please check back often as our online assortment is frequently updated. Cabela’s is limiting quantities of ammunition and reloading supplies. This limitation, which will be lifted once supply catches up with demand, will provide the best chance for the greatest number of our customers to fulfill their needs.
Investors who played the trend were certainly rewarded for their efforts; check out the performance of Cabelas Inc (NYSE:CAB), Olin Corporation (NYSE:OLN), and gunmaker Sturm, Ruger & Company (NYSE:RGR) from the time Olin Corporation (NYSE:OLN) says the demand spiked until last Wednesday: