Smith & Wesson Stock Is a Good Bet as Gun Stocks Rally

Firearm stocks had a strong year in 2020. Gun sales hit a record amid rising unrest and calls to defund the police. On January 6, 2021, another catalyst emerged for gun stocks. There was unrest and a riot in the U.S. Capitol Building as Congress counted the Electoral College votes. 

Gun stocks soared including Smith & Wesson and Sturm Ruger. Due to the continued momentum of these stocks, should investors buy Smith & Wesson SWBI stock? 

Smith & Wesson stock shot up by 18.4 percent on Jan. 6. SWBI wasn't the only firearms manufacturer that saw its stock price rise. Other companies including Sturm Ruger, Vista Outdoor, and Olin Corporation also saw significant upward price action. The chaos at the U.S. Capitol triggered the sudden surge in these stocks. While Congress was counting the Electoral College votes, Trump supporters stormed the premises in a bid to overturn his election defeat. According to the police, four people died and 52 have been arrested. 

The mayor in Washington D.C. even ordered a temporary curfew. Gun and ammunition companies saw their stocks soar amid the curfew, violence, and increasing unrest. 

Smith & Wesson and other firearm producers have been a hot topic on Stocktwits. One user named StockWizardSupreme said, “$SWBI the POTUS has been blocked from social media, his cabinet is considering enacting the 25th amendment. Prepare for chaos and gun stocks to soar.” Another user named RigrKing said, “$SWBI This should have been in the 30s before the unrest. Let's see where it goes from here. Maybe it goes 40+, maybe it goes back to 16. Either way, I'm holding long.”

Due to the continued chaos, most of the users on Stocktwits expect gun and ammo stocks to keep soaring. Whether they are of either political affiliation, investors expect the surge to continue.

Smith & Wesson started paying dividends in September 2020. The company paid a quarterly dividend of $0.05. On Dec. 3, the company declared $0.05 as the quarterly dividend. The dividend implies a dividend yield of nearly 1 percent. 

Currently, Smith & Wesson stock is covered by six analysts. Four of the analysts have a buy rating, while two have a hold rating on the stock. Based on analysts’ consensus target price of $22.4, the stock doesn't have upside or downside. The stock’s recent surge helped it cover the upside analysts had baked into their estimates. Going forward, if we continue to see unrest, analysts might revise their estimates more.

Firearm and ammunition stocks had a good year in 2020 due to the COVID-19 pandemic, civil unrest, and calls to defund the police. Smith & Wesson stock gained more than 150 percent last year. Apart from the continued uncertainty, another catalyst for increasing gun and ammo sales in 2021 could be the Democratic party's win. Democrats favor gun control. Usually, whenever the Democratic Party is in control, there's a surge in firearm sales. Consumers get concerned that they need to buy guns now or miss the opportunity. There could be a surge in gun control, which benefits Smith & Wesson.

Smith & Wesson stock is listed on Nasdaq under the ticker symbol "SWBI." Investors can buy SWBI like any other stock. You just need to have a brokerage account and put in the buy order for the desired quantity of the stock.