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Firearm stocks jump amid gun control talk

Firearm stocks jump amid gun control talk

Talk of tighter gun control rules is giving a boost to gun stocks. Following the recent spate of mass shootings in California, Paris and other areas, firearms are back in the sights of politicians. That’s stoking demand for guns by anyone who might want one and now fears they will get harder to obtain.

Shares of three publicly traded stocks with the heaviest concentration on firearms –  Sturm, Ruger (RGR), Smith & Wesson (SWHC) and ammo maker Vista Outdoor (VSTO) –  have jumped 70% on average this year as investors think already-strong demand for guns could continue to increase as buyers rush to buy more. The gun companies’ share growth has surpassed the 0.9% gain by the Standard & Poor’s 500 this year.

Just Monday, their shares rose an average of of 5.2% as the broad market fell. That comes one day after New York City Mayor Bill de Blasio put out a statement that advocated for the stop of “the flow of both public pension funds and private U.S. dollars into the hands of gun manufacturers who make and market the assault weapons used by terrorists, criminals and the mentally ill.” Investors are betting consumers afraid of new gun rules will load up now for fear that new, more restrictive rules will be passed.

“The increased call for firearms laws, restrictions and regulations leads to the increased demand,” for firearms, says  Brian Ruttenbur, analyst at BB&T. Firearms sales are up 4.7% this year compared with the same period in 2014, Ruttenbur says, citing data from National Instant Criminal Background Check System for consumer background gun checks.

More Americans had their backgrounds checked purchasing guns on Black Friday than any day on record, according to data released by the FBI. The criminal background system  processed 185,345 requests on Nov. 27, one of the largest retail sales days in the country. Background checks for handguns are up 12.3% this year compared with the same period last year, Ruttenbur says. The majority of both Smith & Wesson and Sturm, Ruger’s business come from handguns, he says.