Up more than 2,000% just since 2018, Axon Enterprise (NASDAQ: AXON) stock has already turned at least a few savvy investors into millionaires. The question is, can it do it again anytime soon? The cat's out of the bag, so to speak. It'll be tough for the security technology company to repeat the feat.
Never say never, though. Even if it's not likely to dish out a massive gain, it might still push you much closer to the seven-figure milestone.
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Axon Enterprise, up close and personal
On the off-chance you're reading this but aren't familiar with Axon, Enterprise is the outfit behind the Taser brand of conducted energy weapons. You know them better as stun guns.
That's not all Axon is anymore, however. In fact, its biggest business these days is actually body cameras and the video-evidence software that makes the most of them. It's even wading into the drone arena, marrying this technology with its surveillance and video-recording solutions. Last year, the company did nearly $2.1 billion worth of business, up 33% year over year, but extending a trend that's been in place for far longer.
AXON Revenue (TTM) data by YCharts
The need for less-lethal security options has never been greater, either. Neither has demand for recorded evidence of nearly all enforcement actions from law personnel. Litigation has been normalized, after all. The only meaningful way of responding is with more and better tools, and more information about any particular altercation.
And Axon shines on both fronts.
The value of so-called stun guns in this regard is clear. Rather than a bullet, conducted-energy weapons deliver an electrical charge that incapacitates their target. The company reports that these devices have been used in the field more than 5 million times since their introduction nearly 30 years ago, saving on the order of more than 300,000 lives that may have otherwise been taken by a conventional firearm.
They're safer to wield and use, too. Axon adds that in a review of more than 1,200 usage cases, serious accidental injuries only occurred 0.25% of the time.
This, of course, is only half the solution needed for the new societal norm. Body-worn cameras are also increasingly necessary, by virtue of recording interactions of all types between law enforcement officials and potential perpetrators. Its technology doesn't just record video, though. Its cameras can directly connect to software that turns this recording into credible, official evidence that can be analyzed and presented in a courtroom.
And as was noted, drones are now part of the company's repertoire. In areas where it may be dangerous or physically impossible for a law enforcement professional to be present, the Axon Air and Sky-Hero drones facilitate real-time situational awareness by feeding video back to the drone's pilot. While this is a relatively new business line for the organization, expectations are understandably high.
A major, well-rooted trend with some serious longevity
So what suddenly sent this stock soaring after more than a decade's worth of sideways movement?
It would be naïve to not acknowledge that the world has changed dramatically in just the past several years. For better or worse, the advent of the worldwide web as well as smartphones capable of recording video has made it possible to share accurate -- as well as misleading -- imagery, while the online crowd (again, for better or worse) is capable of clamoring in response to alarming altercations. Police and other law enforcement agencies have never needed to "get it right" more than they need to now, and hold themselves as accountable as the public they serve does.
The social movement is still young, however, and so is the industry. While data from the Police Executive Research Forum suggests that roughly four out of every five of this nation's police departments utilizes body-worn cameras, that doesn't mean every single officer working for those departments does. Numbers from the National Institute of Justice indicates that only about two-thirds of police personnel in the United States wear them, with sheriffs even less likely to do so.
And that's just local law enforcement. While federal law enforcement officials like those employed by the FBI are now mandated to wear them, many of them still don't due to lack of availability.
They're coming, though, as funding and supply will allow it -- here and abroad. Market research outfit Technavio predicts the worldwide body-worn camera business is set to grow at an annualized pace of 19% between now and 2029. Given its massive market share of the police sliver of this market, Axon is positioned to capture at least its fair share of this growth, inside and outside the United States. Cementing this lead is the fact that the company's evidentiary software has been proven to work seamlessly with its hardware.
Although it's much older, the stun-gun industry is catching this same sociocultural tailwind. Mordor Intelligence believes the worldwide conducted energy weapons business is likely to expand at an average yearly pace of 6% through 2030. That's not tremendous growth. However, given this business's enormous growth of late, it's a tough act to follow.
Axon, of course, also augments this business by monetizing the training needed to make proper use of them.
As for drones, Lucintel expects the law enforcement drone business to grow at a clip of 12% per year through 2030, now that the tech is affordable and ready to use as initially hoped.
Still bullish, even if not red-hot
These are encouraging outlooks, to be sure. The question remains, however: After a big run-up that reflects the now-obvious opportunity, is there any chance Axon stock could better help newcomers become millionaires than other investment options?
Yes, it could, but this call comes with a major footnote. That is, this name's biggest and fastest gains are likely in the rearview mirror. From here, this stock won't be quite as bullishly explosive. That's because the newness that excites investors has run its course.
That's OK, though. While its very biggest gains are in the past, there are still plenty of growth-driven gains waiting in the near and distant future. Analysts are calling for revenue improvement of more than 20% this year as well as next, for perspective, with growth of just another 20% expected the year after that. That's just a taste of the sort of progress that's apt to be in the cards further down the road, though.
Data source: StockAnalysis.com. Chart by author.
This might help convince you to take your shot sooner than later: Despite this ticker's recent pullback, the analyst community remains quite bullish. More than half of them still rate this stock a strong buy, sporting a consensus 12-month price of $674.69 that's 22% above the stock's present price. That's not a bad way to start out a new trade.
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James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Axon Enterprise. The Motley Fool has a disclosure policy.
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