Tasers and body cameras are becoming big businesses, but that doesn't mean the leader in those markets, Axon Enterprise (NASDAQ:AXON), has been a great stock recently. In fact, in the past year, the company's share price has fallen 11%, despite revenue growing 43% in the first quarter. Clearly, business growth does not always equal share price growth. 

In Axon's case, investors haven't reacted positively to Axon's management spending ever growing sums of money on R&D and sales staff to grow the business. But long-term these investments could pay off for investors willing to ride out the dip in profitability that comes with that investment. 

To jump-start the stock, investors will likely need confidence that investments in growth will pay off and the bottom line will improve. Here's what investors should be looking for. 

Axon's headquarters with the setting sun in the background.

Image source: Axon Enterprise.

Show me the money

I really think the best thing Axon can do to drive its stock higher is to keep doing what it's doing. Axon body cameras and Evidence.com contracted revenue is now $390 million, up from $71.1 million two years ago, and 94% of new orders include a multiyear contract. 

This momentum is important because the long-term contracts are where Axon makes its money. Selling a body camera is about breakeven financially, but services like Evidence.com generated a 70.2% gross margin in the first quarter of 2017. 

Its taser weapons unit will also continue to be a rock-solid business, although its growth will be overshadowed by body cameras. 

New products drive greater adoption

Axon has had tremendous success in building a business selling tasers and body cameras. But its next step is becoming a real service company for law enforcement. And the product I think customers and investors will get excited about in the next few years is records management that "automate[s] the collection and analysis of virtually all information in public safety."

Reducing paperwork and increasing accuracy should be a high priority for just about every law enforcement agency worldwide. And if Axon can build an interface that appeals to law enforcement, it could broaden the market for Axon body cameras and Evidence.com, and maybe even justify higher prices. 

Policy could move dramatically toward Axon's business

The third big driver could be public policy. Police oversight and misconduct have become hot-button issues across the country. When a police officer shoots a civilian, the first question is: What's on the body camera? 

Such cameras could eventually be mandated by the state, or even federal, level, which would likely prove a huge win for the industry leader. 

Axon could be a great value for long-term investors

It's tough to value Axon by its earnings because the company is investing significantly in research, sales, and marketing, which leaves it with lower net income than it should have long term. But revenue has nearly tripled in the last five years, and if that trend continues, paired with the high margins from body camera services, the stock should be a great value for long-term investors. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.