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Smith & Wesson Holding Corporation (SWHC), Sturm, Ruger & Company (RGR): Gun Stocks Soar as Debate Continues

Learning from history

One of the best ways to know what to expect if lawmakers ever decide to pass a weapons ban is to look at recent history. The assault weapons ban in place from 1994-2004 brought no noticeable increase or decrease in crime, according to research from the U.S. Research Council. When the ban was lifted, sales of guns spiked briefly, but the sales increase was short-lived.

In the end, it seems Smith & Wesson Holding Corporation (NASDAQ:SWHC),Sturm, Ruger & Company (NYSE:RGR), and Olin Corporation (NYSE:OLN) benefit from the possibility of a weapons ban, as long as the weapons ban never goes through. Each of these three companies is a good investment, but Smith & Wesson’s history of solid performance seems to make it the best bet at the moment.

However, the choice isn’t quite that easy. Sturm, Ruger & Company (NYSE:RGR) focuses on quality, offering products well ahead of the competition. Its complete lack of debt makes it a promising stock, especially considering Smith & Wesson is currently $44 million in debt. However, Smith & Wesson’s lower price seems to make it an enticing stock for investors who want a good bargain.

Also, Smith & Wesson has history behind it, going back 160 years. Competition is good for one of the world’s oldest-standing gun manufacturers, but if Smith & Wesson doesn’t keep up with changing trends, the company may find itself surpassed by Sturm, Ruger & Company (NYSE:RGR)’s competitive edge.

Stephanie Faris has no position in any stocks mentioned. The Motley Fool owns shares of Sturm, Ruger & Company. Stephanie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Gun Stocks Soar as Debate Continues originally appeared on is written by Stephanie Faris.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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