Stocks in general have been a stuffy environment for a long time, however, Entrepreneur Dave Portnoy has changed the game for many and Davey Day Trader Global #DDTG has turned the old game into a lot of fun lately and his content is not to be missed!
One stock he mentioned recently that we really like as of late is none other than American made gun company Smith & Wesson (NASDAQ: SWBI). Head trader of DDTG Dave Portnoy was on CNBC's Fast Money last night where the brilliant Portnoy stated "I like the guns" when asked what was his top conviction stock, and we like "The Guns" too!
Due to the recent riots/looting and Most notably the newly established Capital Hill Autonomous Zone commonly referred to as "CHAZ", a lawless 9 block area in Seattle has brought in a surge in gun sales. According to the FBI NICS Firearm background checks for new firearm licences have risen dramatically in the month of May, with over 3 million background checks submitted. A brief search on popular stock site stocktwits.com, investors will find images investors have uploaded of firearms in gun stores being completely sold out!
In addition to its surging gun sales, Smith & Wesson will be issuing a tax free dividend to investors in late summer 2020 in the form of a share as SWBI will be spinning out its firearm business and its outdoor sporting goods American Outdoor Brands. Spinouts generally tend to be beneficial for the stock price as many investors and traders flock to buy a stock as to receive the free shares.
Other developments that could continue to push shares of SWBI higher is the fact that this year is election year in the united states. Shares of SWBI surged to almost $30 dollars nearing election day and with this years election between Democrats and Republics, SWBI may see shares to continue to surge as the Democratic party tends to not be favourable for gun laws, and if democrats win this coming election, citizens may continue to flock to own firearms as more restrictions could be imposed if Joe Biden defeats Donald Trump.
In closing, with the increase in civil unrest in the United States leading to firearm stores being sold out, a tax free dividend in late summer 2020, increased price targets (high estimate of $21.00) an upcoming election and earnings that are coming this Thursday pre-market, we believe Smith & Wesson Brands is a great defensive stock that investors may want to keep on their radar!
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