Let me begin by doffing my cap to my Foolish dueling partner, Chuck Saletta. Chuck is a very smart stock picker, and, in fact, we are normally in complete agreement on the kinds of stocks we like -- Inside Value types.
But regarding Taser International
Much ado about zapping
"What are you going to do? Shoot him with a Taser?" (C'mon, the setup was perfect, no?) We might as well start with this point, since it's the one that gets all the press, especially at Gannett's
That's a lot more generous than I would have been. I've worked in the belly of the newspaper beast, and believe me, you don't get snazzy graphics like the electric-chair comparison without jumping through a few hoops. The lack of elementary fact-checking in what was obviously a significant reporting effort convinces me that the misrepresentation was the result of the paper's continuing adversarial attitude toward Taser. (You don't double-check what you think you know to be true.) Of course, USA Today is far from alone. It shares this myopic point of view with other organizations famous for doing more talking than thinking, like Amnesty International.
The real record
That's too bad, because the vast preponderance of scientific study shows that Taser's weapons are, in fact, as safe as Taser claims. The U.K. study on guinea pig hearts is telling -- it shows that the electrical waveform of the X26 would have to be magnified scores of times to become dangerous to the heart.
Many other studies have shown that police departments that deploy Taser's weapons see a significant drop in injuries to suspects and officers. Furthermore, because the stun guns log every use, there is a record of each deployment, a kind of accountability that's simply impossible with pepper spray, baton strikes, handgun discharges, or physical force.
You might be spooked by the ongoing controversy, but as David has pointed out in his discussions of Rule Breakers philosophy, a dose of this kind of pessimism is exactly the kind of thing that can help investors. The wall of worry keeps some people out of a stock. For a while. When things finally turn around and the controversy abates, those who were in the game when things looked worst score the biggest gains.
Avoiding the valuation trap
I'm guessing that Chuck will point out that Taser's current valuation, even after the mighty fall of the stock, is unsupportable. There's no way anyone can look at today's numbers and come up with $7 a share, let alone $10. I'm just going to make an end run. I don't believe that Taser's current value matters. The company has enormous growth potential and an incredible moat, and its healthy margins and returns on equity and assets will power profits when the sales come back, as I believe they will.
Taser's biggest potential for ultimate shareholder payoffs comes from one major strength: It has absolutely no competition in the stun-gun field. In this respect, it's a far different company from other fast-growing, nosebleed P/E companies. Where a Research In Motion
Electric growth prospects
While recent events hint that the worst of the current sales crisis may be behind, Taser continues to work on initiatives that could provide some very big revenue streams in the future, including the Taser "land mine," an area-control device that would provide police and military installations a safe and more cost-effective denial of entry. The firm is also at work on extended-range weapons meant for military or SWAT-type use.
The Foolish bottom line
I'm not going to pretend that Taser isn't risky or give you some kind of cherry-picked math to make it look cheap. The truth is, I have been as hard on the company as anyone else. (Check the links below for proof.) But unlike the rest of the unwavering Wise, I am at least willing to admit that I can't see the future, and I think that Taser is one of the surest, purest growth plays around, if growth returns. It's rare that you find a company on the cutting edge of a technology that remains so far ahead of its competition, but that's what you get with Taser. If you can stomach a wild ride, and you want a dose of risky-but-explosive potential in your portfolio, Taser is one of a kind.
For related Foolishness:
- Double-check the truth about Taser.
- Can Taser help us to a better world?
- Taser has started cleaning up its mess.
- Think you're getting the next Taser? Read this, this, and this before you bet the farm.
- Taser does have issues of its own, including some recent unwanted buzz.