The most popular (and esoteric) argument for gun stocks being overpriced seems based largely on a riddle that goes something like this:
“You tell me, what happens when gun legislation passes and the buyers realize everything will be okay?”
Which is lovely. I enjoy riddles. And word games. And the works of Nabokov. But this isn’t about playful respite; this is about making money and being right. It becomes my duty, therefore, to thrash you.
I now present three illuminating bullets (I just proofread this and realized I made a pun):
* Stocks like RGR are only trading where they were before sales went crazy
* This legislation will not be hindering gun makers – background checks are perfectly doable because they will most likely have maximum waiting periods attached (1 month or less or else all clear); that’s a minimum to get the measure through the House (if anything even can)
* And, the big shebang…RGR hasn’t raised gun prices and I’m not sure the others have either
Yeah, see that’s the big open secret here. Guns are selling out of stock, but RGR’s CEO was adamant that his company would not be raising prices because, as he phrased it, “gun buyers as a group have long collective memories.” He doesn’t want to prey off his customer base, so RGR hasn’t raised weapons prices at all.
Ergo, once this bill passes and people go “oh, wait, that’s not so bad,” there will be no price incentive for them to cancel their order (“I could sit back and wait for prices to calm down…”). That, right there, isn’t happening. The guns that have been jumping in price are private sales. So, in RGR’s case (and I suspect the other manufacturers as well), there’s no clear financial edge to back out.
There is, however, still the looming possibility that Republicans could lose more seats (remind me, what is the popularity of the GOP at the moment?)…
(I told you I like riddles too)
And so, I am afraid (I’m not actually afraid) that this robust bounty of profitability RGR and the gun market at large are seeing is very much sustainable for a duration of at least a year (possibly two). While eventually and inevitably these orders will slow down, I really couldn’t care less. You see, the stocks are not pricing in this raw influx of cash, and one solid year of the orders they’re experiencing is the equivalent of several years worth of business, all front loaded and with minimum inventory risk attached.
If you enjoy the content at iBankCoin, please follow us on Twitter
3% yield on RGR, not shabby
Brother running the gun said yesterday that sales of AR style rifles are slowing but interestingly, regular long guns are strong and pistols sales are still in the mind blowing realm. Loads of first time buyers including many of the fairer sex and 60-70 year old +.
He also said RGR is going to own the market when the dust settles as they are producing very good product at competitive pricing.
That’s …..running the gun shop…..
Good post.
The stores I frequent are still very low on Smith & Wesson and Ruger pistols. The smaller stores are just starting to see their shelves filling up while the larger stores still have many bare spots, many of which would have SWHC models like the 649, the snubbies. I haven’t seen your Bodyguard model in months. Anything that is concealable has been hot.
The ARs are back in stock and prices are dropping.
Ammo prices have gone through the roof. I’m seeing prices on regular .38SP running 5-10 bucks a box higher than before the madness began. Defensive rounds are seeing an even larger increase. .380 rounds are also running higher, similar to .38s. I think the increases are going to be in ammo, and not necessarily pistols, as you point out.
Larger stores like Walmart, Dicks, and Bass Pro are starting to see their ammo shelves holding ammo for longer. I’m starting to see .380, .38, .40, and .45 sitting on the shelves a little longer, like more than a day. Actually found some .380 at a Walmart in the evening on an odd day. For the last 2 months it has been virtually impossible to get anything from Walmart that wasn’t 20 guage shells or some odd long gun round.
FWIW.
The air is out of the AR-15 tires, I’ve sold all my stock and not re-ordering. Prices are back to normal and falling. This time the market is double flooded with AR’s and the dopes that bought them at 2x$ will have to sell to get half of their money back.
I’ll be able to buy a RGR SR556 for 10-20% less than wholesale within two months.
The AR demand never got to fever pitch around here. Pistols however are beyond description.
But…….
I think the real sleeper in this whole public armament psychosis movement or what ever you want to call it is going to be the ammunition makers.
Any thing and I mean anything from 22LR to 460 Weatherby is just flying off the shelves. The shortage seems to be at the level of the manufacturers. A major sporting goods distributor told my brother last week that their normal shipment volume was about 10MM rounds per week. This was steady year in and year out. Now they are lucky to get 3MM rounds in a weeks time. This is from all manufacturers, publicly owned and private.
So, are there any other companies that you can buy stock in other then OLN.? …which btw I do believe has some major room to run. There are literally hundreds of new firearms owners being minted each day in this country and they are all going to need ammunition.
So while sales of firearms may taper off when the gooberment fails to pass a ban on modern sporting rifles, the demand for ammo is going to remain exponentially higher than it was prior to all this.
I had actually thought of that, but finding ammo makers is difficult. Most seem to be privately held.
Clearly gun/ammo purchases are “anti fragile” to perceived Gov intervention to this constitutionally enshrined right!