Biden’s lead boosts arms manufacturer stocks

D.he lead of Democrat Joe Biden in the polls for the American presidential election in three weeks’ time will increase – and so will the prices of weapons manufacturers in the United States. Many stockbrokers assume that if there is a change in power in the White House, more rifles, revolvers and pistols will be sold and the shares of companies like Smith & Wesson or Sturm Ruger will go up even further.

Investments in arms companies have already paid off in the past few months. While the S&P 500 has increased 3.6 percent since the beginning of the month, Smith & Wesson has increased by 8.1 percent, and Sturm Ruger even increased by 9.5 percent. It looks even more impressive if you look at the time since the beginning of the year: In the current year 2020, the S&P is up 7.8 percent – Smith & Wesson up 135.4 percent, Sturm Ruger up 51.1 percent.

Afraid of chaos after the elections

Many Americans have stocked up on guns in recent months for fear of the coronavirus pandemic, social unrest following the violent death of African American George Floyd in police custody, and fear that a close presidential election on November 3 could end in chaos . Just last month, the head of Smith Wesson said his industry was barely keeping up with demand.

Joe Biden and his vice president candidate, Kamala Harris, advocate tougher gun laws In the short term, this should only increase demand. “Should we get a government from Biden and Harris, I would expect an increase in sales of modern sporting rifles, large magazines and ammunition,” said Aegis analyst Rommel Dionisio, referring to an industry term for automatic fire rifles, the military Similar to weapons and promise particularly high profit margins.

Plus 900 percent after Obama’s election victory

Analysts are looking at the experiences in the era of the Democrat Barack Obama, who also advocated stronger arms regulation. From Obama’s election as president in 2008 to Donald Trump’s election in 2016, Sturm Ruger shares rose nearly 900 percent, while the S&P’s 113 percent gain looks puny in comparison.

Biden, Vice President under Obama, proposes a ban on the sale of automatic weapons and their magazines, similar to the rules that were in place until 2004. Anyone who already owns such a rifle should either hand it over to the government or at least register it.

The years under President Trump, however, have hardly paid off for the arms shareholders. The Sturm Ruger titles, for example, have only managed an increase of 16.5 percent since 2016, much less than the 66 percent at S&P. Republicans are traditionally close to the powerful American gun lobby, and gun enthusiasts under their administration are no longer afraid of losing access to rifles and pistols.

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