It's true. There is a shortage of bullets, and many stores are putting limits on how many bullets a customer can buy. Part of the increase is due to an increase in the demand for handguns, with gun permits increasing by over 25% from last year. Another reason is that gun owners are stocking up on bullets, just like stocking up on gold.
There are a couple of publicly traded companies that manufacture ammunition. Olin Corporation (OLN) makes Winchester Ammunition. The stock has a forward PE of 36 and pays a 4.7% yield.
Alliant Techsystems Inc. (ATK) is another manufacturer of bullets and ammunition to law enforcement agencies and commercial customers. The stock has a forward PE of 8.5 and doesn't pay a dividend. Earnings for the latest quarter were up over 27%.
Smith & Wesson Holding Corp. (SWHC) is primarily a maker and marketer of firearms. It has a forward PE of 10 and has currenly generated negative earnings.
Although bullets and ammo are a smaller portion of the revenues of these companies, there should be some benefit to the bottom line from the increase in sales.
Author does not own any of the above.
By Stockerblog.com
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