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Increasing Gun Sales Drive American Outdoor Brands Corp's Shares 15% Higher in March

By Travis Hoium – Updated Apr 11, 2018 at 11:10AM

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Gun regulations are a risk in 2018 and that's good news for gun stocks.

What happened 

Shares of outdoor product maker American Outdoor Brands Corp (SWBI -0.14%) jumped 14.7% in March, according to data provided by S&P Global Market Intelligence, as gun sales picked up. Guns aren't the only business American Outdoor has, but it's been under pressure over the past year, so investors are happy about the potential sales jump.

So what 

The FBI reported that background checks related to gun purchases were up 4.4% in February and ended up jumping 13.8% in March. Those were the first increases since August 2017.

Three rifles sitting on hay bales.

Image source: Getty Images.

Sales are likely rising because gun enthusiasts fear further regulation as national protests against guns gain traction. Florida passed a bill that increases the age you can buy a gun from 18 to 21 and extended the waiting period to three days. Gun sales tend to increase when the threat of future regulation is highest, which ends up helping gun stocks.

Now what

Operationally, conditions might be improving for gun manufacturers, but it's not all good news for the industry. BlackRock, the world's largest money manager, has said action needs to be taken on guns and is offering funds that won't own gun stocks or retailers that sell guns. Enthusiasts may be active in the gun market today, but legislators and big investors aren't, and that should be a concern for long-term investors. 

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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