I have been pounding the table on gun stocks. The valuations are trading near all time lows. Demand was pulled forward from COVID fears and just never recovered. But that is why the opportunity exists. When valuations get this low, things start to happen, and when those things happen, whatever they are, valuations can rapidly move to the upside.
The first indication of things beginning to happen was following the Charlie Kirk assassination. I started posting on X that Google Search trends for concealed carry and buy gun began to skyrocket.
Then there were other online anecdotes such as big X accounts telling their followers to buy a gun. Or an online news report in Bucks County, PA that said concealed carry permits have spiked 300%. And then in Prairieville, LA, gun shop owners said the recent spike in violence could be spiking demand. Finally, you had big tech influencers posting photos of their concealed carry.
The thesis I had was simple:
Gun stocks are at all time lows and buying at the current valuation has a strong margin of safety.
The United States is near all time highs with political unrest which will lead to more demand.
More demand for guns leads to higher operating margins and a re-rate in valuation.
Then last night my thesis on guns stocks was more than solidified. In fact, the event that occurred, made me double down on my holdings, on a specific name. This even is so significant that I think demand is even higher than I thought following the Kirk shooting, or there is about to be a wave of consolidation.
And the best part? Wall Street is completely asleep at the wheel. I have not seen a single person talk about this event. Google hasn’t even picked it up. Which gives me an informational edge to act and really back up the truck.