It's Time to Buy a Gun
By Jeff Clark
January 26, 2010
"Holy crap!" My wife screamed as she squeezed the trigger of the .38 caliber handgun. The force of the blast pushed her arms skyward.
An instant later, the bullet sliced through her target, splitting its head in two. Each half flapped back and forth in the jet-wash breeze of the titanium shot.
"Nice shot, ma'am," said the head-phoned, bearded shooting-range attendant.
My wife grinned proudly. "I'll take this one," she said.
I walked over to her and kissed her on the forehead. "Merry Christmas," I said and handed her an application for a gun permit.
Forget the diamond earrings. Forget the little blue Tiffany boxes filled with tiny, overpriced trinkets. This year, my wife asked Santa to put a gun under the tree.
"But why do you want a gun?" I asked when the subject came up last Thanksgiving.
"I don't know," she shrugged. "I guess with everything going on in the world these days, I'd like to get a gun before they're outlawed completely."
My wife certainly isn't alone in that sentiment. As a local gun dealer explained to me, "The biggest boost to sales always happens when the government proposes some new law to restrict gun ownership."
It was fear of new gun-control laws that caused firearm sales to skyrocket immediately following President Obama's election. As of October 2009, FBI background checks on firearm sales – a leading indicator for the trend of firearm sales themselves – are up more than 18% over the same 10-month period in 2008.
But good times for gunmakers are almost always temporary. The boost in sales caused by political uncertainty never lasts more than a few months. That's a big reason why gunmaker stocks – despite achieving high double-digit sales growth – haven't really participated in the market rally over the past year. Stocks in the sector trade, on average, for only seven times earnings and 0.7 times sales.
However, there's something different happening this time. In the 22 years I've known my wife, not once, ever, has she even considered owning a gun... until now.
Let's face it, our world is vastly different today than it was a few short years ago. We've given up countless freedoms in the name of "national security." The lazy members of our society demand "More! More!" while hard-working and industrious people are forced, through confiscatory tax rates, to weave an even larger portion of the social safety net.
Government grows ever larger like a leech engorging on its host, while the individual and his right to privacy shrink.
There's a growing trend toward survivalism. There's a genuine fear – among people who ought not have any cause for concern – that what they have and what they've earned can be taken away from them.
That's why people are buying gold. That's why they're stocking up on ammunition. That's why my wife wanted a gun for Christmas.
And that's why shares of gun manufacturers may be the best bargains in the stock market right now.
The stocks haven't rallied with the market, so they won't give up much if a significant correction takes hold. They're fundamentally cheap. The companies have strong balance sheets with plenty of cash on hand. And gun sales are increasing during a time in which sales of nearly everything else are falling.
I recently told my Advanced Income subscribers about a covered-call strategy on a gun stock that offered a 7% immediate return and the potential for 26% gains over the next six months. It's one of the lowest-risk trades in the market right now.
For more information on Advanced Income, click here.
Best regards and good trading,
Jeff Clark |
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Last |
Change |
52-Wk |
| S&P 500 |
1126.48 |
+0.53% |
+30.17% |
| Oil (USO) |
38.20 |
+1.22% |
-31.63% |
| Gold (GLD) |
108.36 |
+1.70% |
+29.83% |
| Silver (SLV) |
17.17 |
+2.14% |
+67.02% |
| U.S. Dollar |
77.61 |
-0.38% |
-4.15% |
| Euro |
1.44 |
+0.55% |
+2.50% |
| VIX |
19.47 |
-1.22% |
-55.96% |
| HUI |
438.37 |
+0.39% |
+58.85% |
| 10-Year Yield |
3.81% |
0.06 |
2.84 |
|
| Company |
Sym |
Industry |
CGI Group |
GIB |
software |
Western Gas |
WES |
MLP |
CEC Entertainment |
CEC |
restaurants |
Panasonic |
PC |
electronics |
Cheniere Energy |
CQP |
MLP |
Acxiom |
ACXM |
outsourcing |
National Presto |
NPK |
appliances |
Fifth Third |
FITB |
bank |
Thor Industries |
THO |
campers |
OM Group |
OMG |
chemicals |
Ticketmaster |
TKTM |
concert tickets |
BNSF |
BNI |
railroads |
Williams Partners |
WPZ |
MLP |
Rosetta Resources |
ROSE |
oil & gas drilling |
Live Nation |
LYV |
concert venues |
Enterprise GP |
EPE |
MLP |
Duncan Energy |
DEP |
MLP |
Acorda |
ACOR |
biotech |
Breitburn Energy |
BBEP |
oil & gas drilling |
Liberty Global |
LBTYA |
TV systems |
Plexus |
PLXS |
circuit boards |
Williams Pipeline |
WMZ |
MLP |
Calumet Specialty |
CLMT |
refining |
CareFusion |
CFN |
medical devices |
Inergy Holdings |
NRGP |
MLP |
Wintrust Financial |
WTFC |
bank |
|
|
| Company |
Sym |
Industry |
Myriad Genetics |
MYGN |
diagnostics |
Towne Bank |
TOWN |
bank |
China Real Estate |
CRIC |
real estate info |
BigBand Networks |
BBND |
telecom |
|
|
