The Anarchy Trade: Weapons and Security Services

The VIX is often presented as the fear gauge in the markets; it has broken down from extremely elevated levels as fears of financial collapse subside, as do the worries of a 1930s like Depression.

However, the action in certain stocks and the feelings among many Americans seem to point to fear being at the highest level in recent times for the possibility of civil unrest. The new administration has been taking actions that worry many Americans about how much control the government has, and whether we are headed to, or already in, a Socialist state. Gun sales are rising as more and more Americans sign up for Permission to Carry licenses and crime rates continue to rise across the nation.

It appears that stocks related to a period of civil unrest have garnered the attention of investors, as large amounts of money flows into many of the stocks that are sympathy plays off a nation with worries over civil unrest. I will present some names in focus below, although I recommend more in depth research on the names before making a trade.

Gun Stocks:

Smith and Wesson (SWHC), Ruger (RGR), and Olin (OLN): Shares of the gun stocks have risen more than 100% this year as gun and ammo sales skyrocket on growing fears among the civil population. Olin is a more "under the radar" play that makes ammo and owns the Winchester brand.

Home Security and Protection:

Brink's Home Security (CFL): Shares have broken to new highs after starting to trade individually in October and volume has been ramping up in shares. The small cap stock with excellent earnings power is a name that could see demand for products on the rise as consumers look to protect their families and property.

Detention and Prison Services:

Geo Group (GEO) and Cornell Companies (CRN): With crime rates on the rise, these facility management firms will continue to expand and see large government contracts for their services. A nation with civil unrest will require a lot of prison and correctional services.

Disclosure: No Holdings

Comments

[prairiedog555:]

My local Walmart (rural Kansas) has a sign up that says "maximum of 4 boxs of ammo sold to any individual" and I can tell you that the prices are all elevated.
My local "gun nut" friends tell me it is a reaction to Pres. Obama, (with Hilary advising) to the theory that they know they cannot get guns out of America, but the evil plan is to curtail or make costlier the ammunition needed. (Along with the military factor)
It actually would be a good plan. I like to shoot sometimes but I am more reluctant at double the price of ammo.
So will continued hoarding occur? I believe it will, they will NEVER trust the Dems even if they swear they will not do this. And Pres Obama seems to be smart enough to leave the subject alone, if his AG will shut up.

Apr 28 08:44 AM