Gun Stocks Sell Off: Trump, Republican Congress And Supreme Court Justices Near-Term Negative For Industry

Gun stocks are under pressure Wednesday, with the likes of Sturm Ruger & Company Inc RGR, Smith & Wesson Holding Corp SWHC, TASER International, Inc. TASR and Digital Ally, Inc. DGLY all bearing the brunt of the selling generated by the Presidential election results.

Donald Trump, President-elect, is believed to be a supporter of pro-gun legislation. Added to this, Trump's quest to uphold the integrity and strength of America's military augurs well for the gun companies.

With Republicans retaining control of both houses, gun sales could be out of the regulatory purview.

With anti-gun legislation out of the equation, superfluous perspective would yield the deduction that gun stocks would be much sought after. However, the selloff might be due to the fact that traders are dumping these stocks on the realization that the fear factor that drove gun sales is now no longer in the works. This would mean a near-term slowdown in sales.

Wedbush analyst James Hardiman told Benzinga, "Although good for the long-term viability of the industry, we believe that a Trump victory when coupled with a Republican Congress and choice of Supreme Court justice(s) is a net-negative for the stock as it eliminates any realistic fear of gun regulation, which has been a major driver of gun sales over the past eight years and which was expected to be a positive factor in the early days of a Clinton administration."

Meanwhile, some of non-lethal security stocks are moving sharply higher.

• FLIR Systems, Inc. FLIR was up 2.10 percent at $33.01.
• OSI Systems, Inc. OSIS was up 0.90 percent at $68.25.
• Kratos Defense & Security Solutions, Inc KTOS was rallying 5 percent to $5.88.
• Brink's Company BCO was up 0.37 percent at $40.50.
• Ascent Capital Group Inc ASCMA was soaring 13.14 percent to $18.51.

At last check:

• Sturm Ruger & Company was slumping 10.64 percent to $57.55.
• Smith & Wesson plunged 8.93 percent to $25.91.
• TASER was down a more modest 1.16 percent to $22.23.
• Digital Ally was slipping 1.52 percent to $4.92.