What happened 

Shares of gun manufacturer Sturm Ruger & Company Inc (NYSE:RGR) jumped 20.8% in August, according to data provided by S&P Global Market Intelligence, as a number of positive factors drove the stock higher. 

So what 

The first catalyst was FBI data that showed 1.8 million background checks in July, the second highest on record. Gun demand has been weak the last two years, so a turnaround is positive news for Sturm Ruger & Company. 

Rifles on a wall.

Image source: Getty Images.

The company also reported earnings that included a 2.6% decline in revenue to $128.4 million and a 50.9% rise in earnings per share to $0.86. Results topped estimates by $0.03. 

The final catalyst was American Outdoor Brands reporting a strong quarter, which pulled all gun stocks higher late in the month. 

Now what 

Investors are looking for any signs of life in gun stocks right now and August had a few strong indicators. What investors should watch for is signs the rally in demand is sustaining or losing steam. That's what will tell us how stocks will react long-term. For now, the positive move in shares last month is giving more hope to gun stocks than they've seen in a long time. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.