Can you still carry Smith & Wesson (SWHC) in your portfolio and make money?
That's an important question after the stock surged as much as 10% just in the past five days, netting a new 52-week high. Investors have the company's strong third-quarter earnings report to thank.
Smith & Wesson has had plenty of obstacles, including stricter background check requirements for firearm purchasers, proposed by President Barack Obama.
The rise in mass shootings and school-relate incidents has prompted Obama to also called for smart gun technology -- a type of safety measure that uses fingerprint recognition and other biometric data to prevent anyone (other than the lawful gun owner) from firing the weapon. "If we can set it up so you can't unlock your phone unless you have the right fingerprint, why can't we do the same for guns?" said the president.
Smart-gun technology is something former president Bill Clinton also proposed. How will these issues affect Smith & Wesson? Smith & Wesson, one of the standard issuers of police firearms and those issued to the armed forces, voluntarily signed on to a president Clinton's smart-gun plan. The company created smart gun prototypes that were ready for production a decade ago.
But because of boycotts by the NRA, Smith & Wesson -- then perceived as giving in to political persuasion -- was nearly destroyed. Its revenue plummeted 40%, created a glut of used Smith & Wesson guns no one wanted at the time. The company had no choice but to sell itself to Saf-T-Hammer, an Arizona gun parts maker. Saf-T-Hammer came to terms with the NRA, mending the broken relationship later changing its name to Smith & Wesson Holdings. This occurred in 2004. So now the company doesn't operate with the same mindset, nor does it have mistake-prone management. Also, the company has repaired it's broken relationship with the NRA and has the support of its loyal customers.