What happened

Shares of Sturm, Ruger (NYSE:RGR) rose 36.7% in 2020 as the firearms industry bounced back.

So what

The National Shooting Sports Foundation reported that adjusted FBI data showed criminal background checks on gun buyers soared 64% in 2020 through the end of November, reaching a record 19.2 million. That far surpassed the previous full-year record of 2016 when 15.7 million background checks were conducted.

Woman shooting at gun range

Image source: Getty Images.

While that doesn't mean that's how many guns were sold, since someone may have bought more than one gun or not bought any at all, it gives a close approximation for consumer demand for firearms.

The NSSF estimates 7.7 million people bought their first gun last year.

RGR Chart

RGR data by YCharts.

The reason gun sales soared in 2020 is because individuals felt a greater need for personal protection. The COVID-19 pandemic, an economy that was shut down, food hoarding, riots, civil unrest, calls to defund the police, and a presidential election featuring candidates with very different views on gun ownership rights caused people to take the protection of themselves, their families, and their property more seriously.

Now what

Despite the gains Sturm, Ruger made last year, there's a good possibility it's not done. A Biden presidency will have gun owners concerned about restrictions on ownership of certain firearms, which should keep Ruger's sales charging higher.

That should increase profits, too, and because its dividend is set at about 40% of net income, investors should receive larger payments this year.

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.