Shares of Axon Enterprise (AXON -0.90%) jumped a whopping 29.2% in June, according to data provided by S&P Global Market Intelligence, as investors bid up one of the few companies that will benefit from changes in law enforcement.
Axon hasn't released any specific data about its business improving over the last couple of months, but it's a natural winner from the recent protests. The company supplies one of the only hardware and technical solutions to law enforcement agencies looking to provide more accountability to the public, so it's logical to think that business will pick up as a result of increased scrutiny.
I don't think the recent protests against law enforcement fundamentally change the direction of Axon's business long term, but they could have the effect of accelerating a transition to body cameras and less-lethal weapons, which will be a tailwind for the company.
The real benefit for Axon will be when we see agencies sign up for long-term contracts for hardware and cloud services. This ends up being a very sticky business because once all of your data is in the Axon system, it's a high switching cost to move to another company. Those relationships are ultimately how Axon will add value for shareholders.
Axon may not see a flood of business over the next few months, but law enforcement agencies around the world are starting to think about how they can be accountable to society. Body cameras are a great answer and have already provided valuable insight into policing practices. Even if shares are hot right now, this is a growth stock I think will do well for years to come, and I'm not about to sell right now.