We recently compiled a list of the 10 Best Prison and Law Enforcement Stocks To Invest In. In this article, we are going to take a look at where Axon Enterprise Inc. (NASDAQ:AXON) stands against the other prison and law enforcement stocks.
The United Nations Office on Drugs and Crime (UNODC) report “Prison Matters 2024: Global Prison Population and Trends; A Focus on Rehabilitation” found that after a decline during the COVID-19 pandemic, the global prison population rose to approximately 11.5 million in 2022, reflecting a 5.5% increase since 2012. Despite this rise, the overall percentage of incarcerated individuals compared to the total world population has actually decreased, primarily due to faster population growth.
Overcrowding remains a significant issue, affecting over 60% of countries, which raises serious concerns regarding the health and human rights of inmates. Additionally, there is a pressing need for improved measures to prevent deaths in custody, as suicide accounts for more than 10% of all prison deaths. In some countries, prisons also face staffing shortages, which can compromise safety and hinder rehabilitation efforts.
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Innovations in Technology for Prisons and Law Enforcement
The landscape of prisons and law enforcement is evolving, marked by significant trends and changes in policy. The use of technology in law enforcement is on the rise, particularly with artificial intelligence (AI) tools designed to streamline operations and reduce administrative burdens. As reported by CNBC on November 26, many companies are stepping in to assist police departments. For example, Truleo has developed an AI technology that automatically generates narratives by capturing real-time voice notes from officers in the field. CEO of Truleo, Anthony Tassone, emphasizes that this method to generate police reports is both efficient and ethical.
Another company, 365Labs, focuses on improving the quality of police reports through AI-driven grammar and error correction. CEO of 365Labs, Mohit Vij, acknowledges that while AI can help with basic writing tasks, human judgment remains crucial for serious incidents like burglaries or assaults. This combination of technology and human oversight aims to enhance the efficiency of law enforcement while ensuring that officers can effectively serve their communities.
Recent Events and Market Reactions
On November 11, CNBC reported that private prison stocks rose after President-elect Donald Trump’s appointment of Tom Homan as his “border czar.” Homan, who led Immigration and Customs Enforcement (ICE) during Trump’s first term, will oversee all deportation efforts for undocumented immigrants. Trump emphasized that Homan will manage security at the southern and northern borders, as well as maritime and aviation security.
Previously, in July, Homan had stated his intention to run an extensive deportation operation, claiming it would be the largest in US history. Analyst Isaac Boltansky from BTIG noted that a second Trump administration would likely increase contracts with the US Marshals Service and the Federal Bureau of Prisons, suggesting a more aggressive approach to border enforcement that could benefit companies involved in immigration enforcement and detention services.
Our Methodology
To compile our list of the 10 best prison and law enforcement stocks to invest in, we used the Finviz and Yahoo stock screeners to find the largest security and law enforcement companies. We also reviewed our own rankings and consulted various online resources. We carefully verified our list to remove any companies that can not be classified as prison and law enforcement stocks.
From an initial pool of more than 20 prison and law enforcement stocks, we focused on the top 10 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds. The 10 best prison and law enforcement stocks to invest in are ranked in ascending order based on the number of hedge funds holding stakes in them.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A technician in a white coat testing an in-car system on a modern military vehicle.
Axon Enterprise Inc. (NASDAQ:AXON)
Number of Hedge Fund Holders: 46
Axon Enterprise Inc. (NASDAQ:AXON), formerly known as TASER International, is a leading American company focused on developing technology and products for public safety, including military and law enforcement applications. The company’s suite of products and solutions includes TASER energy devices, body cameras, in-car cameras, cloud-hosted digital evidence management solutions, productivity software, and real-time operations capabilities.
In Q3 2024, Axon Enterprise Inc. (NASDAQ:AXON) reported impressive financial results, with revenue reaching $544 million, a 32% increase year-over-year. This growth was driven by strong demand for its TASER products and cloud services, both of which saw a 36% rise year-over-year. Axon’s (NASDAQ:AXON) annual recurring revenue also grew 36% to $885 million, highlighting its successful subscription model. Axon’s net income was $67 million, supporting a robust adjusted EBITDA of $145 million.
Axon Enterprise Inc. (NASDAQ:AXON) has managed to achieve over 30% annual revenue growth in each of the first three quarters of 2024. Q3 2024 marks the company’s 11th consecutive quarter of growth above 25%. The company has positioned itself as a leader in public safety technology by focusing on innovative solutions. Axon Enterprise Inc.’s (NASDAQ:AXON) commitment to artificial intelligence (AI) is evident in its suite of AI-powered products, such as Axon Auto-Transcribe, Draft One, automatic license plate reading (ALPR), and video redaction, which are designed to improve operational efficiency and investigative accuracy. These tools help law enforcement agencies streamline their processes.
As of the third quarter of 2024, Axon Enterprise Inc. (NASDAQ:AXON) was held by 46 hedge funds, according to Insider Monkey’s database. Carillon Tower Advisers stated the following regarding Axon Enterprise Inc. (NASDAQ:AXON) in its “Carillon Eagle Mid Cap Growth Fund” third quarter 2024 investor letter:
“Axon Enterprise Inc. (NASDAQ:AXON) is a market-leading provider of next-generation law enforcement technology solutions. The company has had ongoing success with new product rollouts within both its TASER and body camera product lines, as well as its innovative software offerings, and the stock has responded accordingly. The company remains intensely focused on the development of new law enforcement solutions, and we believe recent developments in interesting areas such as drones, as well as in artificial intelligence-enabled solutions for evidence- and administrative-related uses, could provide an additional tailwind to the company’s robust growth.”
Overall, AXON ranks 1st on our list of the best prison and law enforcement stocks to invest in. While we acknowledge the potential of AXON as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AXON but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.