Shares of Smith & Wesson Brands (NASDAQ:SWBI) soared 152% in 2020 as the firearms industry roared back to life and guns started flying off the shelves.
A convergence of events charged individuals into buying more firearms last year. The coronavirus pandemic caused people to worry about what food shortages might mean, which was followed by riots and civil unrest breaking out in numerous major American cities.
When politicians began supporting the concept of defunding (if not outright dismantling) local police departments, consumers began to take seriously the need for personal defense. Then the presidential election offered a glimpse of a repeat of the 2016 elections, where one candidate favored greater gun control measures and the other one had a record of protecting the Second Amendment right to keep and bear arms.
SWBI data by YCharts
Smith & Wesson posted fiscal second quarter earnings last month that showed gun sales more than doubled year over year with profit margins rapidly expanding.
President and CEO Mark Smith said it was the iconic gunmaker’s “second consecutive record-breaking quarter” and there doesn’t appear to be any let up in firearms demand.
The FBI had already conducted over 35.7 million background checks on potential gun buyers by the end of November, almost 26% more than all of 2019. Many of the same forces that drove Smith & Wesson Brands higher this year remain in place, giving investors confidence it will continue shooting higher.
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.
View more information: https://www.fool.com/investing/2021/01/03/why-smith-wesson-brands-shot-142-higher-in-2020/