Smith & Wesson AR-15 rifles for sale at a gun show in Loveland, Colo., Oct. 11, 2014.LUKE SHARRETT/The New York Times
Smith & Wesson Holding Corp. jumped to its highest level in eight years and Sturm Ruger & Co. Inc. soared on investor expectations that U.S. gun enthusiasts will purchase more pistols and rifles as calls for restrictions increase.
The gun makers' shares have advanced in recent years in the wake of mass shootings such as the one in California last week that have led to stepped-up efforts to restrict ownership. Sales for both companies have increased as people stockpile weapons in response to politicians' demands for tougher legislation. The political efforts have all fizzled.
"The No. 1 driver of firearms sales is fear," said Brian Ruttenbur, an analyst at BB&T Capital Markets, pointing out that all the Democratic Party presidential candidates have discussed tightening gun control. "Primarily, fear of registration restrictions, banning and things like that."
Concern for personal safety is also driving demand, Mr. Ruttenbur said. Unrest in Ferguson, Mo., and Baltimore had led people to purchase firearms – a movement that has been refuelled by a fear of domestic terrorist attacks after last week's shooting that killed 14 and wounded 21 in San Bernardino, Calif.
"It's kind of a double whammy," he said.
Background checks by the Federal Bureau of Investigation rose 7.7 per cent in November from a year earlier, according to Mr. Ruttenbur, citing adjusted figures published by the National Shooting Sports Foundation trade group. Checks for handguns rose 22 per cent, while those for long guns fell 3.8 per cent.
The FBI background checks are the best proxy for gun sales because there are about 200 manufacturers, most of whom are closely held, Mr. Ruttenbur said.
Thomas Dineen, chief financial officer of Sturm Ruger, didn't immediately return a voice-mail message. Liz Sharp, vice-president of investor relations for Smith & Wesson, didn't immediately return requests for comment.
Smith & Wesson surged 7.6 per cent to $20.44 (U.S.) in New York after reaching $20.62, the highest intraday price since October, 2007. The shares doubled this year through Friday. Sturm Ruger increased 5.9 per cent to $57.50 after gaining to $58.90, the biggest intraday jump since April 15. The stock had climbed 57 per cent this year through Friday.