Don't Read If You're Easily Offended -- This Trade is Controversial

You might find this trade unethical.

On the other hand, you might be proud to pull the trigger.

Fox News likes to say they report– and you decide. That’s what I’m doing today. I’m reporting on a potentially lucrative trading opportunity I’ve uncovered. You decide whether it’s for you or not. I’m not getting into the ethics or politics of it. That’s for you to figure out.

I’m talking about gun stocks today. I’m going to show you why I think they could make a fantastic trade as the market limps into the fourth quarter. But like I said, I’m not drifting into a debate on gun violence. Because if there’s one thing scarier than gun violence in America, it’s getting in a heated argument over gun control.

So go ahead and delete the draft of that hate mail you were about to send my way. The bottom line is that I have an obligation to show you the trends that give you the best chance to make a buck or two in the market—no matter what. What you choose to do with this information is completely up to you…

But enough with the disclaimers. Let’s get right into why gun stocks are poised to outperform the market for the foreseeable future…

First, there’s the fear factor. People are terrified about the violent crime they see on the evening news. They want to protect their families. And yes, they want to buy guns to do it. Every incident of gun violence not only stokes these fears, but also the fears of those worried that the government is just moments away from hammering out new restrictions on firearms and ammunition. These fears have resulted in big sales for the gun manufacturers.

“From 2008 to 2013, the gun and ammo manufacturing industry had one of the stronger periods in its history, with revenue growing at an annual rate of roughly 8.4% to an estimated $14.7 billion in 2013,” MarketWatch says.

And that exceptional performance is reflected in the charts as well:

High-Caliber Gains

Smith & Wesson Holding Corp. (NASDAQ:SWHC) and Sturm Ruger & Co. (NYSE:RGR) have both enjoyed tremendous years. Heck, Smith & Wesson stock has nearly doubled year-to-date, while the S&P 500 remains down more than 2% on the year.

This red-hot performance isn’t a fluke. Smith & Wesson crushed earnings estimates last quarter, topping analyst guesses on both the top and bottom lines.

“On the Aug. 27 earnings call, CEO James Debney said that National Instant Criminal Background Check System checks showed firearm applications were up 10.1% during the quarter, a bullish sign for future sales,” Investors Business Daily reports.

It’s no wonder that gun stocks are soaring as we approach the final months of the year…

Look, my job is to find you profitable trading opportunities. Whether you think gun manufacturers are “merchants of death,” or paladins of our second Amendment rights, that’s your call. Trade accordingly.

Sincerely,

Greg Guenthner
for The Daily Reckoning

P.SWhat are the strongest stocks on the market? If you want to cash in on the biggest profits this market has to offer, sign up for my Rude Awakening e-letter, right here. Stop missing out. Click here now to sign up for FREE.

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