NEW YORK (TheStreet) -- On Tuesday, I opened up my copy of the Wall Street Journal and staring back at me on the front page are the words "White House Efforts to Relax Gun Exports Face Resistance."Huh? How did I miss the memo about the Obama administration no longer trying to take all our guns away? Sure enough, as I read through the article it appears, at least at face value, that the Obama administration has stated they want to increase employment with this initiative. Currently, American defense manufacturers face a disadvantage against foreign competitors due to burdensome bureaucracy and regulations. The idea is to help level the playing field. Promoting existing profitable businesses appears to be a much better long-term solution compared to selecting winners and losers with hundreds of millions of taxpayer dollars. The bankrupt Solyndra quickly comes to mind as an example of what not to do. Reading further into the article, it appears the main resistance comes from the U.S. Department of Homeland-Security. This appears at least a little odd that an executive department is opposed to the idea, while the president is publicly promoting it. I have to believe the topic "came up" at some point earlier, which means some posturing is going on. With an election right around the corner it can be challenging to see through the fog, but at least we can look at what companies are likely to benefit from greater gun exports. 6 Stocks to Benefit From Truckers' Switch to Natural Gas >> Using the word "gun" in a title is a much better attention-grabber than "arms" or "military equipment" (it caught your attention right?), so it's understandable why the Wall Street Journal used "gun" instead of "military equipment." However, the effort extends much further than just guns. I created a list of companies that are unlikely to fall in value if nothing happens, yet have significant sales if allowed to increase sales. It's a "heads I win, tails I break-even" type of toss, and one I take advantage of every time one comes my way.
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). Dividend Growth Reveals the Path to Profits >> 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) 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) 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.