Cameras for law enforcement are becoming more common every year. Image source: TASER International.

The past decade has been a great time to be an investor in law enforcement and personal weapons businesses. TASER International (AXON -4.10%) and Smith & Wesson (SWBI -1.99%) are up 256% and 271% respectively over that time.

But going forward, the fortunes of the two companies could diverge. And that may make one a much better investment than the other.

Growth galore in weapon sales

If you look at the growth chart of these two companies over the past five years you can see that they're both on a growth spurt. Smith & Wesson is a little more sporadic, as expected in gun sales, which often ebb and flow based on sentiments around gun regulation; TASER International has been on a steady climb higher.

SWHC Revenue (TTM) Chart

SWHC Revenue (TTM) data by YCharts.

But these trends may start to diverge soon. As I highlighted recently, the Axon body camera and the rapidly growing cloud data storage business at TASER International will be a cash flow generator for many years to come. Selling one body camera is great, but the service contract behind it generates more than 10 times the revenue of the initial camera sale. So $4.8 million in body camera sales last quarter wasn't all that impressive, but the recurring revenue from storing data from those cameras will likely generate more than $10 million per year for the next three to five years. As more body cameras get into the hands of law enforcement, this recurring revenue will continue to grow each quarter.

Image source: Smith & Wesson.

Smith & Wesson has had an explosion in demand, but it's occurring amid a perfect storm of political tension and fear of future gun regulation. And the growth curve has slowed significantly. According to a recent analysis by the New York Times, gun sales peaked in 2013 after President Obama was reelected and have been flattish since then.

As far as sustained growth goes, I would give the edge to TASER International. I don't see the move toward more body cameras and fewer lethal weapons slowing around the world, and gun control is a very real risk on the horizon for Smith & Wesson.

Growth is expensive

While the growth edge may lie with TASER International, it's still a very expensive stock. Below is a chart showing price-to-sales ratios for both TASER International and Smith & Wesson. I used this measure because TASER is investing a lot in both sales and research and development for growth, which lowers earnings, making the price-to-earnings ratio (P/E) less valuable. But even comparing price-to-sales ratios, it's far more expensive than Smith & Wesson.

SWHC PS Ratio (TTM) Chart

SWHC PS Ratio (TTM) data by YCharts.

But TASER International also has much higher margins. If top-line growth begins to outstrip operating-expense growth, this could help drive earnings higher, which is what investors are hoping for.

If you're looking for a value stock, TASER International isn't it. And with a current P/E of 17.5, Smith & Wesson looks a lot cheaper for conservative investors.

The way to play the weapons business today

Given the growth curve, high margins, and incredible market potential, I think TASER International has a lot more to offer investors than Smith & Wesson. It's an expensive stock, to be sure, but body cameras and Tasers have a bright future as law enforcement seeks non-lethal options and improved accountability. And that's why, of these two, TASER International is the better stock.