Please ensure Javascript is enabled for purposes of website accessibility

Why Sturm Ruger & Company Inc's Shares Jumped 20.8% in August

By Travis Hoium – Sep 6, 2018 at 2:04AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

There may be a reason to be excited about gun stocks again.

What happened 

Shares of gun manufacturer Sturm Ruger & Company Inc (RGR 1.34%) 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. 

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.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.