This article was updated on Feb. 17, 2016.

On or about noon on Saturday, Aug. 9, 2014, 18-year-old Michael Brown was shot to death by police on the streets of Ferguson, Missouri. Since then, we've seen multiple similar incidents of alleged police brutality take place in locations ranging from Florida to Baltimore to New York and beyond.

But it all began with Ferguson.

The incident that Saturday afternoon sparked weeks of protests in Ferguson and across the nation, both peaceful and less than peaceful. "Shows of force" by police departments armed with surplus U.S. military equipment soon followed. And of course, there's been the debate over whether police officers should be required to wear "on-body" video cameras such as TASER International's (AXON -0.68%) AXON.

But why?


Source: TASER International.

How do they work?
Curious to know the answer, I contacted TASER Chief Financial Officer Dan Behrendt to learn how police body cameras work in practice. As he advised, a police body camera differs from, say, the video camera function of your iPhone in several ways. First, it can be clipped to an officer's uniform, or, with the AXON Flex model, even to his cap or glasses. Second, AXON is "ruggedized" to survive the hard-knock life of an active-duty police officer (chasing suspects, tackling bad guys). These things must take a licking and keep on ticking.

On functionality, Behrendt noted that an AXON camera has battery life to last through a 12-hour shift. It records constantly, overwriting old video as it records. To save a recording for later review, a police officer must toggle a button to alert the device that something important is happening. When that happens, AXON reaches back 30 seconds in time, capturing video and audio of events that preceded an incident-in-the-making, and continuing to record and save until the officer tells it to stop.

At shift's end, AXON can be plugged into a docking station for automatic, wireless transfer of all saved recordings (plus recharging of the AXON). This data can either be retained on a police department's own servers or uploaded to TASER's EVIDENCE.com cloud-based storage service.

So in a nutshell, body cameras such as TASER's AXON have two main benefits. First, they record important police interactions with the public as they happen. These recordings can be reviewed later when disputes arise as to exactly what happened. And because officers record only important incidents, there's less data to search through later on, when it becomes necessary to track down relevant video and audio recordings.

Second, and perhaps even more important, a famous 2013 study sponsored by TASER (but conducted by a grad student at the prestigious Cambridge University) found strong evidence that when police officers wear body cameras, they tend to avoid using force against civilians. In the years since, similar studies have been conducted in Orlando, Denver, Los Angeles, and elsewhere -- all tending to support the findings of the initial Cambridge study. When wearing body cameras, not only are police more careful in the application of force to civilians, but civilians notice the change in attitude too -- and citizen complaints against the police drop.

This is key, because it tends to defuse worries that police officers might pick and choose, and record only the data they want people to see. Turns out, just wearing the AXON is enough to remind officers that "someone is watching." As a result, AXON-equipped police officers tend to be on their best behavior, so that incidents like the one in Ferguson are less likely to happen in the first place.

Who makes them?
These twin attributes show us why body cameras might be popular with police and civilians alike. But as the devices gain more attention -- and more sales -- they also begin to attract the intention of investors like us. So... who exactly is it that makes these things?

There are at least four main companies that you want to be aware of in this space, at this time. (More are likely to emerge as the devices become more popular.) Here they are:

  • TASER: First and most obvious is TASER itself. With more than 100,000 AXON police body cameras and TASER CAMS sold to date, TASER is the clear market leader. Indeed, at one point in 2014, Behrendt was able to boast that in bids to sell on-body cameras to police departments, TASER had "only lost one... We have won well over 90% of our competitive situations over the past year."
  • VieVu: That one bid that TASER lost, said Behrendt, "we lost... to VieVu." VieVu bills itself as making wearable body cameras "by Cops for Cops," and is privately held (i.e., you cannot buy shares of it). VieVu's founder and CEO, former Seattle Police Department SWAT officer Steve Ward, served as Vice President of Marketing and International Sales for TASER from 2004 to 2007.
  • (GOOG 0.94%) (GOOG 0.94%)Google: Google Glass appears to offer the potential to compete with AXON in the police body cameras market. But as Behrendt notes, Google Glass "does not buffer, have the battery life to last a shift nor is it ruggedized for law enforcement use." Not yet, anyway -- the company reportedly has a Google Glass 2 in the works...
  • Digital Ally (DGLY -3.11%): If possible, this one has gotten even more press than TASER has since the events in Ferguson. Microcap Digital Ally sells police cruiser dashboard cameras, wearable cameras, and even a "flashlight video system." From a pre-Ferguson share price of $3.83, Digital Ally shares rocketed as high as $33.59 per share in early September 2014, before falling back to a more recent price of just $5 and change as of February 2016. 

Digital Ally police cruiser dashboard cam. Source: Digital Ally.

What stocks can you buy?
Continual incidents of police violence, and of citizen protests against same, periodically promise to revive investor interest in Digital Ally stock in particular -- and perhaps rightly so. I mean, at one point, the stock was up nearly nine times in less than a month. Surely, where there's smoke, there's fire?

Well, maybe. There's no doubt that Digital Ally was once a smoking-hot stock. Another point in its favor: Valued today at just $28 million in market capitalization, Digital Ally shares sell for less than twice its annual sales. Meanwhile, TASER stock sells for more than four times sales (and Google costs even more).

That seems to suggest that Digital Ally stock is a bargain. But hold on just one second. Turns out, while TASER and Google are both profitable, Digital Ally is not. Despite making more than $20 million in sales over the past year, the company booked more than $10 million in losses  -- and indeed, according to data from S&P Global Market Intelligence, Digital Ally has racked up about $24 million in losses over the past five years (and hasn't earned a profit in the last six years, even after Ferguson).

The upshot for investors
If you see a future in body cameras for police and want to invest in this industry, the safer bet is to stick with profitable on-body camera makers -- such as Google or TASER. At valuations of 29 times earnings and 44 times earnings, respectively, neither stock looks particularly cheap. But at least they're cheaper than a stock selling for a P/E of "infinity" -- which is what Digital Ally costs.

TASER's AXON Flex. Image source: TASER International.