Over the past week, as civil unrest spread across America in protest of the death of 46-year-old George Floyd in Minneapolis, one mid-cap technology stock has caught fire: Axon (NASDAQ:AAXN) stock.
Axon, which makes and sells things like Tasers, body cameras, dash cameras and cloud solutions to law enforcement agencies, has long been viewed by Wall Street as a stock to buy when the world is focused on police brutality issues.
That’s because many investors see the products and services which Axon provides as tools which can help alleviate those issues.
After all, Axon’s own stated mission is to make non-lethal Tasers the gold standard, reduce social conflict through the widespread usage of cameras, and provide data-driven, cloud-hosted software systems.
It should be no surprise, then, that AAXN stock is up more than 23% since late May.
This big rally in Axon stock will persist. Indeed, Axon stock is one of the best stocks to buy and hold for the next 10 years.
Axon Stock Has Humble Beginnings
Axon first came across my radar back in early 2017, when the AAXN stock price, then trading under the ticker TASR, was around $20.
Formerly known as Taser, Axon was undergoing a massive transformation from selling just Tasers, to providing a suite of law enforcement technology solutions, including body cameras, dash cameras and cloud-hosted software.
I said buy AAXN stock, because Axon’s body cameras were going to go from niche to ubiquitous across law enforcement amid widespread political and social pressure calling for a fall in unarmed police killings.
That’s exactly what has happened. Unit sales of Axon’s body cameras rose 130% since the end of 2016. Unarmed police killings have fallen nearly 25%. And AAXN stock rose about 300%.
All of these favorable trends will continue for Axon.
Around 40% of U.S. law enforcement agencies still don’t use body cameras. Unarmed police killings still aren’t zero. And sociopolitical pressure on law enforcement agencies to increase transparency and reduce force is clearly only growing.
As such, sales of Axon’s Tasers, body cameras, and dash cameras will only keep growing. As they do, AAXN stock will keep grinding higher.
More Than Meets the Eye
The best thing about AAXN stock, though, is that the aforementioned bull thesis of sociopolitical pressure driving higher adoption of Tasers and cameras is only part of the company’s long-term bull thesis.
Indeed, it’s the smaller part of that thesis.
The bigger part is that Axon is pioneering revolutionary and much-needed change across all of law enforcement, and in so doing, turning into the ubiquitous digital backbone of the future of law enforcement.
That is, law enforcement agencies are largely antiquated. Axon is changing that. The company has developed a truly end-to-end technology platform which modernizes all aspects of the police incident process. This includes software that makes it easier for police and investigators to glean evidence from cloud-hosted databases and video footage and dispatch software that informs attending officers of critical information prior to arriving at a scene.
It also provides management software that automates and digitizes the records keeping process, and analysis software that helps optimize the judicial process.
Sound like the future of law enforcement? It is. And Axon powers it all.
The addressable market for stun guns and body cameras is about $2.6 billion. The addressable market for these cloud solutions? About $5.8 billion.
So, in turning into the digital backbone of the future of law enforcement, Axon is attacking an $8.4 billion addressable market.
Revenues last year were just $531 million.
Clearly, there’s still a ton of room for growth, and significant tailwinds should help Axon realize its full potential rather quickly.
Bottom Line on Axon Stock
Wall Street loves AAXN as a stock to buy when police brutality is in the spotlight.
But the stock is much, much more than that. It’s a long-term winner on the idea that Axon is transforming into the ubiquitous digital backbone of the future of law enforcement.
Axon stock is up 300% over the past three years. It will rally nearly as much over the next few years, too.
Luke Lango is a Markets Analyst for InvestorPlace. He has been professionally analyzing stocks for several years, previously working at various hedge funds and currently running his own investment fund in San Diego. A Caltech graduate, Luke has consistently been recognized as one of the best stock pickers in the world by various other analysts and platforms, and has developed a reputation for leveraging his technology background to identify growth stocks that deliver outstanding returns. Luke is also the founder of Fantastic, a social discovery company backed by an LA-based internet venture firm. As of this writing, he did not own a position in any of the aforementioned securities.