Shares of TASER International (NASDAQ:AAXN) are up an incredible 89% in 2013, beating the S&P 500 by nearly 60% this year. With such a fantastic run-up that has been incredibly rewarding for investors this year, many want to know just how sustainable this rally is.
In this video, Fool consumer goods analyst Blake Bos takes a look at some of the major drivers behind TASER this year. Once plagued by very high costs of goods sold that inhibited profits, the company has since been able to grow revenue while keeping costs flat, which has translated into growth of the company's bottom line. Combine this with TASER recently getting out from under some safety concerns regarding its weapons, and it starts to become clear why Wall Street has smiled on this stock this year.
However, the stock has now run up to a valuation of 51 times earnings, which many investors find way too pricey today. The international growth runway for TASER could be enormous, as currently only one out of every 50 law enforcement officers internationally carries a TASER, while one in two officers carries the electric weapon in the U.S., but TASER may need to execute perfectly from here in order to meet such an enormous valuation. Blake tells investors what the key metrics to watch with TASER will be to know if it's on its way to meeting and beating market expectations at these levels or if this stock will fall short from here.
Blake Bos has no position in any stocks mentioned, and neither does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.