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3 Stocks Seeing Boosted Demand Amid U.S. Demonstrations

By (Jesse Cohen/ MarketsJun 03, 2020 03:38AM ET
3 Stocks Seeing Boosted Demand Amid U.S. Demonstrations
By (Jesse Cohen/   |  Jun 03, 2020 03:38AM ET
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The global markets have so far looked past demonstrations across the U.S. in response to the tragic killing of George Floyd in Minneapolis while in police custody on May 25th. The nationwide protests, though often peaceful, against police brutality and racism in cities such as New York, Chicago, Atlanta, Los Angeles and Miami have also, on occasion turned chaotic, leading to property damage, and looting as well as curfews and the deployment of police and the National Guard.

Given the unfolding events, here are three companies in particular whose products could see increased demand, at least in the short term:

1. Axon

Axon Enterprise (NASDAQ:AAXN), formerly known as Taser International, supplies body cameras and video recording software technology and tasers to law enforcement. The Scottsdale, Arizona-based company, which has a market cap of nearly $5.85 billion, has seen its stock surge 34.4% since late last week.

Shares of the company, which have rallied 46.5% year-over-year compared to the S&P 500’s 12% gain over the same timeframe, touched an all-time high of $99.62 on Tuesday, before closing at $98.85. The stock experienced a similar surge in late 2014 after Michael Brown was fatally shot by police in Ferguson, Missouri and his family campaigned for police officers to wear body cameras. As of late 2019, body cameras and associated services accounted for nearly a quarter of Axon's overall business.

Axon Weekly Chart
Axon Weekly Chart

Axon announced earnings and revenue which beat consensus estimates on May 7, with sales jumping 27% from the same period a year earlier. In particular, Axon saw a 38% increase in international sales, most notably in the UK, Australia, and Canada, as well as its entry into two new markets in Asia and South America.

Other stocks in the security sector which should also be on your radar include Digital Ally (NASDAQ:DGLY), which is in the same business of providing body and car cameras for law enforcement, as well as Vislink Technologies (NASDAQ:VISL) and Cemtrex (NASDAQ:CETX), which both make facial recognition and live video products.

2. Home Depot

Home Depot (NYSE:HD) is the largest home improvement retailer in the United States, supplying building materials, construction products, as well as installation and repair services.

Shares of the Atlanta, Georgia-based company are up roughly 33% in the last year, giving it a market cap of $271.8 billion. The stock settled at an all-time high of $252.71 yesterday.

Home Depot Weekly Chart
Home Depot Weekly Chart

Home Depot is well-positioned to benefit from the rebuilding efforts for property damage amid demonstrations that might turn violent. The company serves three primary customer groups: do-it-yourselfers, do-it-for-me patrons and professional contractors, which accounted for about 45% of the company's revenue as of November 2019, according to Jefferies analyst Jonathan Matuszewsk.

The company missed estimates for quarterly earnings when it reported results on May 19, due to rising coronavirus-related costs, however, it did post better-than-expected revenue figures. U.S. comparable-store sales for the first quarter jumped 7.5%, a stark contrast from the dismal sales results offered by many other retailers.

3. Sturm Ruger & Company

Sturm Ruger & Company (NYSE:RGR) is engaged in the design, manufacturing, and sale of firearms, such as rifles, pistols, and revolvers. The Southport, Connecticut-based company is currently America's largest firearm manufacturer, according to recent data from the Bureau of Alcohol, Tobacco, Firearms and Explosives.

Shares have jumped 17.5% since last Friday, continuing this year’s rally which was first spurred by the initial panic surrounding the coronavirus pandemic

In the latest earnings release, CEO Christopher Killoy stated:

“Anecdotal evidence suggests that this increased demand may likely be related to Covid-19, the impact of state-level restrictions and heightened concern for personal protection."

Year-to-date, the stock has gained around 51% in 2020, significantly outperforming the S&P 500’s 4.6% drop in the same period. Data released by the Federal Bureau of Investigation showed the number of background checks for gun sales in April increased 25% year-over-year to more than 2.9 million, the record for a single month since 1998.

Storm Ruger shares ended at $71.17 last night, their best level since March 2016, giving the company a valuation of $1.2 billion.

Sturm Ruger & Company Weekly Chart
Sturm Ruger & Company Weekly Chart

The firearms maker announced that earnings topped consensus estimates on May 6. Revenue for the first quarter rose 8% from the year-ago period to $123.6 million.

Other notable names in this space that could generate some interest include American Outdoor Brands (NASDAQ:AOBC), formerly known as Smith & Wesson Brands, and ammunition maker Vista Outdoor (NYSE:VSTO).

3 Stocks Seeing Boosted Demand Amid U.S. Demonstrations

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3 Stocks Seeing Boosted Demand Amid U.S. Demonstrations

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Comments (3)
Michael DAmico
Michael DAmico Jun 07, 2020 3:39PM ET
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yes, profit off of tasers and guns.    Hope y'all feel good about it
gutaussehend jung
gutaussehend jung Jun 03, 2020 12:40PM ET
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lol nothing, got it.
Lorenzo Finamore
Lorenzo Finamore Jun 03, 2020 11:24AM ET
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