Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Analyst: Ammo Maker Vista Outdoor Has 32% Upside After Georgia Runoff Elections

By Rich Duprey - Jan 6, 2021 at 1:17PM

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

Ammunition demand was already at record levels leading to shortages.

Ammunition maker Vista Outdoor ( VSTO -8.76% ) should benefit from the Georgia Senate runoff elections as the results should bolster demand for firearms, Riley Securities analyst Eric Wold says.

On Wednesday, Wold reiterated his buy recommendation of the owner of the leading Federal Premium brand of ammo as well as the recently acquired Remington brand, and set a price target of $33 per share, some 32% above yesterday's closing price for Vista of $24.92 per share.

Dollar sign on ammunition

Image source: Getty Images.

Stockpiling ammunition

Wold told investors in a research note written before the Senate election results were final to expect volatility in Vista Outdoor's stock price regardless of the outcome, but said demand for firearms typically surges in the early part of Democratic administrations.

That was certainly the case during former President Barack Obama's tenure as fear of strict gun control legislation kept sales at elevated levels, though sales last year hit all-time record highs.

According to the National Shooting Sports Foundation, adjusted FBI data for criminal background checks on potential gun buyers hit 21.1 million, some 60% more than were conducted in 2019 and 34% higher than the previous record hit in 2016.

In November, Vista Outdoor said year-to-date shooting sports sales jumped 26% year over year leading to operating profits quadrupling. CEO Chris Metz attributed the sales increases mostly to participation in recreational shooting sports fueled in part by concerns for safety and personal protection.

Demand is so high Vista's president of ammunition made a YouTube video pleading for consumer understanding that the company was working overtime to produce as much ammo as it could. That's not likely to abate now that the Democrats appear to have won the two Georgia senate seats, stoking concerns that stricter gun ownership legislation will be coming.

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Vista Outdoor Inc. Stock Quote
Vista Outdoor Inc.
$38.27 (-8.76%) $-3.67

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/03/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

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