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The Biden administration just banned the importation of Russian ammunition, which makes up the overwhelming majority of cheap steel cased ammo used in the US. Last year, we saw record buyups of firearms and ammunition at the peak of the pandemic. .223/5.56 used in AR15s was first to go and is still incredibly difficult to find at decent prices. As a substitute, 7.62x39 became increasingly popular over the past year as more and more gun enthusiasts shifted to AKs and other guns chambered in this caliber since it was available more regularly and stayed in stock longer than 5.56. In the months leading up to today, 7.62x39 almost came back down to pre-pandemic prices.
However, with the ban upcoming, the biggest source of 7.62x39 is getting cut off especially since it is a primarily Russian caliber. As of today, ammo prices are back at peak pandemic prices. All other ammo prices are also going up significantly because steel cased ammo provided the cheap alternative to brass ammo.
Looking forward, all those folks who were shifting over to AKs no longer have the reason to do so. Instead, domestic production of 5.56 is probably going to bring people flocking back to the AR15 platform since it's what they'll be able to get ammo for in the coming months/years.
So, what to do? Vista Outdoor (VSTO) acquired the Remington Ammunition plant last year and has been in full swing since February of this year. VSTO also owns Federal, another major American ammunition manufacturer. Since December 2020, VSTO has doubled in price and could see more upside as American ammunition demand spikes.
Meanwhile, Smith & Wesson could be looking at a bump up as they are one of the many popular manufacturers of budget AR15s, such as the M&P15 line. They also produce a long line of popular handguns, particularly their 9mm Shields which have been amongst the most popular for Concealed Carry, a practice which has also been rising in popularity over the years (9mm also continues to be in extremely high demand and is very difficult to find right now).
Anyway, I plan to buy shares and maybe some longer dated calls in the coming week.
TL;DR: Cheap Russian ammo imports banned, domestic guns and ammo go up.