When TASER International (NASDAQ:TASR) was found in June to be 15% responsible for the death of a man in a 2006 police action, investors sold. And rightfully so; its risk profile had taken a sharp turn for the worse. We all wondered: Would the ruling unleash a string of proportional judgments against TASER? And, if so, would that overwhelm its litigation insurance?

We don't yet have complete answers to either question. But a new ruling in the case should encourage those who own shares of the stun-gun maker. On Friday, a judge set aside $5.2 million in punitive damages levied by the jury, leaving just $150,000 in compensatory payments.

Our 120,000-plus Motley Fool CAPS community, already bullish because of TASER's bear-bitten valuation, seems ready to celebrate:


TASER International

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Data current as of Oct. 27, 2008.

"This stock is a quiet sleeper now, but the potential is incredible, and the stock is currently cheap! With no real competitor, and the potential of a less than lethal means of force, this stock can only grow," wrote CAPS investor hp11325 last Thursday. "When this financial mess is over, hold on tight, because this stock is going to take off like a rocket."

History supports that view. Steve Wymer, manager of the Fidelity Growth Company (FDGRX) fund, rebounded from the dot-com bust with better-than-40% returns in 2003. Recently, he's betting on Illumina (NASDAQ:ILMN), Qualcomm (NASDAQ:QCOM), First Solar (NASDAQ:FSLR), and other fast movers.

TASER isn't one of his holdings. But it, too, would bounce back big if its legal woes were resolved. However, this case doesn't achieve that, according to company general counsel Doug Klint. "Notwithstanding the favorable ruling on these motions, TASER International will continue to consider all appropriate legal channels available in this case, including filing an appeal," he said in a press release.

Translation: TASER has won this round, but was still ruled proportionally responsible for the death of a man, a dangerous precedent that, unless reversed, could haunt the company and its shareholders for years. Tread carefully, Fool.

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