With the market in a correction, it’s tough for even the best stocks to advance. But Axon (AAXN), formerly Taser International, has boomed to new highs on the back of strong earnings and a sunny outlook for its line of law enforcement technology and weapon products.

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Axon specializes in body-worn cameras and electroshock weapons. It also boasts Evidence.com, a cloud-based digital evidence platform. The Scottsdale, Arizona company looks set to benefit from political pressure to record police officers.

While it’s not a good time to be buying stocks, the Nasdaq-listed company is worth keeping under surveillance for the next market rally.

On Feb. 27, Axon reported earnings per share of 13 cents, defying fourth-quarter views for an 8-cent loss. Revenue climbed 16% to $95 million, also topping. It sees 2018 revenue up 16%-18%.

The stock skyrocketed 28% the next session, blasting back above a 28.06 cup-with-handle buy point. It continued to rally until March 12, then consolidated tightly.

Axon leapt 7.4% to 42.40 on the stock market today, hitting a record high. Its relative strength line, which tracks the stock vs. the S&P 500 index, is at a 13-year high.

Axon Fleet ‘Gained Traction’

Dougherty & Co. senior analyst Jeremy Hamblin rates the stock as a buy. He argues that the company will continue to perform strongly.

“The new Axon Fleet in-car camera solution has gained traction faster than expected with annualized contract revenue already exceeding $5M in just two quarters (1% share of market) and appears to be disruptive to the market given that product pricing is as much as a 50% discount to industry standard-bearers, WatchGuard, COBAN and Panasonic,” Hamblin said in a research note following the Q4 earnings.

“We also see opportunity for international sales to reach new highs and expect the first contract wins for BWCs and/or weapons sales to come in non-English speaking countries such as France, Italy or Germany over the next year or two,” he added.

Last November Axon moved to rein in costs, including a hiring freeze and rationalization of nonessential roles.

In addition, Hamblin see a highly skewed upside for the stock due to the attractiveness of the monopolistic weapons business.

More Bodycam Contracts

The future for its bodycam business looks strong. The city of Baltimore last week extended its existing contract to equip 2,500 officers. The contract, which includes Axon’s software and data storage, is now worth $18.5 million and continues until 2023. Chicago Police Department and Virginia Beach Police Department also agreed to deals in the last week.

The body cameras are a vehicle to push its enterprise software business. Analysts see Evidence.com revenue growing to $100 million in FY18.

And in its most recent earnings report, Axon said 69 U.S. major city law enforcement agencies had purchased its body cameras or signed up for Evidence.com.

Axon claims on its website more than 17,000 law enforcement agencies in more than 100 countries are now part of its network.

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