The 1994 Federal Ban on Assault Weapons has just expired. President Bush and many members of Congress have expressed support for extending the ban but have not yet actually done so. Interested investors might want to keep an eye on developments (or a lack thereof) in this area, as gun manufacturers stand to possibly make some money.
Major gun manufacturers include Smith & Wesson
According to the Consumer Federation of America, many gun makers are planning to reintroduce assault weapons shortly, with some marketing campaigns already under way. Susan Peschin, CFA Firearms Project director, said that, "The gun industry is chomping at the bit for the ban to expire.. Gun makers have grand plans to profit from expiration of the assault weapons ban. In many ways, America's public safety loss is the gun industry's gain." It's also potentially a gain for investors -- at least for those who aren't troubled by gun money, as are many socially responsible investors. (Learn more about socially responsible investing.)
The CFA expects the following developments if the ban remains defunct:
- "Assault weapons will be more lethal and less expensive. High-capacity magazines will be back in production for civilian sale, and manufacturers will package them with new semi-automatic firearms. Prices will drop as supply dramatically increases."
- "Fueled by consumer nostalgia, makers of assault weapons will blitz the market with new models of guns banned under the 1994 law, such as AK-47s, TEC-9s and Uzis. If the original manufacturers are out of business, existing manufacturers will buy the rights to the older weapon designs."
- "Domestic manufacturers will be able to evade current executive orders banning the import of foreign made 'non-sporting' assault weapons. By shipping key component parts to the United States and combining these foreign made parts with new U.S.-made parts, importers will be able to make fully legal pre-ban assault weapons. The otherwise restricted assault weapons can then be sold legally in the United States."
- "Law enforcement may be forced to adopt a more militaristic approach to policing. For example, officers may remain in their cruisers and ask individuals to come out of their cars during traffic stops, and they may employ armored vehicles for increased protection. These tactics may eventually replace current law enforcement strategies such as Community Oriented Policing."
Of course, opinions are not unanimous on the matter. A spokesperson for the National Rifle Association said, "What we ought to be concerned about is firearms in the hands of criminals, not in the hands of law-abiding citizens."
Some articles of interest on gun makers:
Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.