Quick-draw Smith & Wesson is up 125% in the last 12 months and over 66% since the start of the year. I do have a concern about the stock getting ahead of itself; however, this is mitigated by the forward price-to-earnings ratio remaining under 18.
Not to be outdone, Ruger is performing like a marksman with gains of 138% in the last 12 months and revenue improving from $255 million in 2010 to $328 million in 2011 (Ruger's best year).
Between Smith and Ruger, I have to lean toward Smith. Ruger's chart appears fearfully extended, especially at the monthly level and with the P/E ratio over 20.Olin Corp. (OLN - Get Report) makes bullets. More guns should result in (in theory) more bullets sold. Olin makes Winchester ammunition and is as close as you can get to a pure ammunition play as I could find (Olin makes other products besides ammo). General Dynamics (GD - Get Report) makes pilotless drones we see on TV and read about. Drones are on the list of items Obama states he would like to sell more of. General Dynamics sells many other military products making even this $24 Billion company a potentially large winner with a change in export regulations. Lockheed Martin (LMT) makes C-130 aircraft, the air workhorse of the military. Like General Dynamics, Lockheed Martin is capacious enough that a few extra sales are not likely going to impact the stock price in a dramatic way. Regardless, the stock has performed great this year, up 15% from a year ago and is breaking out of a base with conviction. Last on my list is United Technologies (UTX), the maker of many defense products, including the famous Black Hawk Helicopter. When you are a $74 Billion global corporation, you're not likely going to double the price of your stock from one initiative that has resistance right out of the gate. Get Ready for the M&A Boom >> The upside is United, Lockheed, and General Dynamics are my favorites to actually gain sales. As I understand the situation, it's the small-arm sales that are meeting "resistance." If I have to bet one way or the other, I would bet the "big boys" get the contracts and the small arms manufacturers are told "the risk is too great." I would like to believe differently -- and it would mean more American jobs -- but that's how I handicap this race. >>To see these stocks in action, visit the 6 Companies May Profit From Increased Gun Exports portfolio on Stockpickr.