What a “Mike Brown Law” Means for Ambarella and Digital Ally

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It might seem difficult to connect Ambarella Inc (AMBA) and Digital Ally, Inc (DGLY) to the social conflicts of America. But these two stocks are actually poised to soar now more than ever as the tragic events of Ferguson, Missouri reach a new phase: healing.

what the mike brown law means for ambarella inc and digital ally inc.For months there has been unrest in the 21,000-person town of Ferguson stemming from the August death of Michael Brown, an 18-year-old unarmed black man who was fatally shot by Darren Wilson, a white police officer.

Last night, a grand jury found that there was no probable cause to indict Wilson, effectively closing the criminal case. But what does this unfortunate series of events have to do with the stock market?

Quite a lot, actually.

A Mike Brown Law Could Send AMBA stock and DGLY Soaring

Brown’s family — while calling for peaceful demonstrations and further investigation — also called for legal changes.

The family released a statement that expressed disappointment in the grand jury’s decision, and — this is where it gets interesting for AMBA stock and DGLY stock — asked for public support for “our campaign to ensure that every police officer working the streets in this country wears a body camera.”

A so-called Mike Brown Law is gaining significant grassroots support. A petition to the Obama administration on whitehouse.gov has already gathered more than 154,000 signatures. The demands are not insignificant, and would require either an increase in government revenue (i.e. more taxes) or less spending in other areas of government.

Digital Ally makes all sorts of cameras, but several of them are designed specifically for use by police. In early September, DGLY stock shot higher on news that 50 cameras — most of them Digital Ally’s — were donated to the Ferguson Police Department.

DGLY stock is already up more than 52% in 2014, but if there’s any sort of political will to move forward with the Mike Brown Law, Digital Ally shares should continue to soar. They aren’t today. DGLY stock is off more than 7% after a 12% rally yesterday. Traders obviously got speculative in the days leading up to the grand jury decision, and are now exiting their positions with nice losses.

AMBA, on the other hand, is probably more well known as the chip supplier for the wearable action sports camera-maker GoPro Inc (GPRO). But one of the reasons I call AMBA the best growth stock you’ve never heard of is because its revenue stream is diversified across several diverse high-growth areas, like IP security cameras and “backup cams” in cars.

Ambarella  is also expected to develop video technology for drones, and has wearable cameras of its own that can be affixed to police officers’ uniforms. AMBA stock is also up more than 50% so far this year.

As of this writing John Divine was long Jan 2015 AMBA $20 calls and Jan 2016 AMBA $25 calls. You can follow him on Twitter at @divinebizkid and on StockTwits at stocktwits.com/divinebizkid.

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Article printed from InvestorPlace Media, https://investorplace.com/2014/11/what-the-mike-brown-law-means-for-ambarella-inc-and-digital-ally-inc/.

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