Under the Radar: Ruger Reloads

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There are ways to profit from political swings.

Since the Democrats captured the White House, the stock market, and TheStreet.com Ratings' model, has warmed up to the health-care industry, which is likely to benefit from government aid.

Another niche that has become attractive is arms production. Some gun enthusiasts, fearing what they say may be an unfavorable shift in public policy, have started hoarding firearms and ammunition.

Gun maker Sturm, Ruger & Co.(RGR Quote) was founded in 1949 in a rented machine shop in Southport, Connecticut. (It's now in Fairfield, where General Electric(GE Quote) is based.) As World War II had recently concluded, the company's founders received a swath of criticism from family, friends and industry veterans who expected the company to languish because of falling demand. But the company, which proved to be a hotbed for independent thinking, continued with its business plans. Its first product became the most popular .22-caliber pistol ever produced in the U.S.

Sturm, Ruger & Co. posted an impressive first quarter. Demand has spiked since Obama's inauguration as the president has advocated reform. Firearms sales spiked 56% during the quarter and the order backlog almost tripled to $136 million, or 458,900 units. (Smith & Wesson(SWHC Quote), a rival, reported that revenue in the three months through April rose 20%.) Sturm, Ruger is adding $12 million to its 2009 capital expenditure because demand is well beyond production capacity. To share the wealth, the company paid an 8.6-cent dividend to shareholders, which it hadn't done since 2005.