Analysis: AXON URI VMC CHPT

After you receive this Alert, we will buy 275 shares of Axon Enterprise  (AXON) at or near $120.75. Following the trade, this new position will account for 1% of the portfolio.

We are taking advantage of the recent pullback in shares of Axon, a company that in the past was primarily known for its Taser product, but in recent years has morphed into one that also includes software and sensors. The latter business is primarily comprised of body cameras, in-car systems, and related cloud-based software as a service solution. The software and sensor business has been growing for the company, and recently overtook the Taser business in terms of revenue generation.

Customers for Axon's products are primarily state and local law enforcement, U.S. federal civilian and defense agencies, corrections, fire departments, and emergency medical services with 80% of that revenue derived inside the U.S.

As public safety has become a top priority on President Biden's agenda, we believe demand for non-lethal weapons like tasers, and body cameras is likely to be stronger in the coming quarters. The connection to the Biden agenda is a similar thesis to ones behind our positions in United Rentals (URI) , Vulcan Materials (VMC) and ChargePoint (CHPT) . However, we have to recognize the market is likely to remain volatile as we head into the upcoming September-quarter earnings season and that could see AXON shares re-test their September lows.

For that reason, we are starting this new position off with a Two rating and a price target of $145. We'll look to build out this holding on either a pullback in the share price or on program wins that lead 2023 expectations to be revised higher from current levels.

We'll have more in depth comments, both technical and fundamental, on the why behind this new position later.

(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to toggle the chart to sort by Purchase Date.)