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Why Vista Outdoor Stock Popped 23% This Morning

By Rich Smith - Jun 1, 2020 at 10:59AM

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Social unrest may make this ammunition maker's business more secure.

What happened

Shares of ammunition and outdoor sporting goods manufacturer Vista Outdoor (VSTO 2.06%) spiked 23% higher as Monday trading began, although the stock has since retraced to about a 12% gain as of 11:20 a.m. EDT.

There's no company-specific news that would directly explain Vista's higher stock price. Earnings last came out nearly a month ago, and the news wasn't great then. The company's next earnings report isn't due for another two months.

Colorful display of ammunition in different shapes and sizes

Image source: Getty Images.

So what

That said, it doesn't take a lot of imagination to figure out why this stock is on the rise today. A week of demonstrations in the streets against excessive use of force by the police, combined with reports of sporadic rioting and destruction of property, and reports of more excessive use of force to contain that rioting and destruction of property, combine to make Americans feel less secure.

Whether it's abusive police or violent rioters who spark that fear, the fear is real, and it may cause Americans to load up on guns and ammunition just to feel a bit more secure.

Now what

Vista Outdoor doesn't sell guns anymore -- but it does sell ammunition and gun accessories, including the popular American Eagle brand of bullets, Blackhawk gun holsters, and Bushnell sights. For better or worse, the more nervous Americans feel, the more of these products they're likely to buy in the days and weeks ahead.

And this, if you ask me, is why Vista Outdoor stock is on the rise today.

Rich Smith 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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Stocks Mentioned

Vista Outdoor Inc. Stock Quote
Vista Outdoor Inc.
VSTO
$31.15 (2.06%) $0.63

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