How Taser Shocked Wall Avenue within the Early 2000s
In 2002, “stun gun” maker Taser, now known as Axon Enterprise (AXON), went on one of the crucial gorgeous runs in Wall Avenue historical past. From late October 2002 to its prime in December of 2004, Taser soared from $0.40 to $33.45, registering a mind-blowing 8,262.50% return.
Picture Supply: Zacks Funding Analysis
What drove Taser’s euphoric transfer? The reply is the proper storm of product innovation, luck, and a scarcity of competitors. In 2003, Taser perfected its non-lethal weapon, the TASER X26. As a result of the X26 was much less cumbersome and lighter than its early fashions, Taser was capable of develop into the gold customary of non-lethal know-how for police departments throughout the nation.
Gone had been the times had been police solely had the troublesome binary selection of utilizing deadly drive or no drive in any respect. In the meantime, as a result of the 9/11 tragedy had lately occurred, Taser was capable of win funding from the U.S. Division of Protection (DoD) to offer its stun gun know-how to the navy and pilots (to make use of as a protection in opposition to hijackers. By the tip of 2003, over 4,000 regulation enforcement companies had adopted Taser’s know-how.
Taser: Purchase Excessive, Promote Greater
On Wall Avenue, hindsight is 20/20. Previous to its huge transfer, Taser was an illiquid, unknown firm, that had registered destructive returns. That stated, buyers may have nonetheless made life-changing fortunes by latching onto the inventory after it had already registered triple-digit income progress and had gained 1,000%.
Taser: Again-to-Again Excessive Tight Flags
William O’Neil was one of many biggest progress buyers of all-time. O’Neil gained reputation along with his distinctive view of markets. As an alternative of solely counting on both technicals or fundamentals, O’Neil used each to achieve a bonus on Wall Avenue, finally making a fortune. A few of O’Neil’s most worthwhile trades got here from his high-tight flag sample in shares like Qualcomm (QCOM) (in 2000) and Taser in 2003.
What’s an O’Neil Excessive-Tight Flag?
In O’Neil’s basic e-book, “Find out how to Make Cash in Shares” he recognized Wall Avenue’s “nice paradox.” That’s, “What appears too excessive and dangerous to the bulk often goes increased, and what appears low and low cost often goes decrease.” In different phrase’s O’Neil believed that buyers can buy momentum and energy as an alternative of in search of bargains. The excessive tight flag is essentially the most excessive instance of this idea. An O’Neil excessive tight flag may be recognized by the next traits:
1. A inventory should transfer 100% or extra inside 4 to eight weeks.
2. After the flag pole is constructed, the inventory ought to relaxation, correcting not more than 25% over the subsequent 3 to five weeks.
3. Lastly, a breakout above the earlier excessive triggers the excessive tight flag.
Within the early 2000s, Taser did the unthinkable and broke out of two consecutive excessive tight flags.
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Sandisk: Shades of 2003 Taser
“There may be nothing new in Wall Avenue. There can’t be as a result of hypothesis is as previous because the hills. No matter occurs in thestock market todayhas occurred earlier than and can occur once more.” ~ Jesse Livermore
So what relevance does 2003 Taser should 2026? Zacks Rank #1 (Robust Purchase) inventory Sandisk Company (SNDK) has a virtually an identical sample to 2003 Taser. In January, SNDK shares broke out of a basic excessive tight flag sample and supplied buyers with a 154% acquire in simply 4 weeks. Since then, the inventory has consolidated in a shallow 25% vary, forming one other potential excessive tight flag sample.
Picture Supply: TradingView
Sandisk is Rising Quick and is Catalyst Wealthy
Sandisk designs, develops, and manufactures NAND flash-based reminiscence playing cards and storage gadgets utilized in knowledge facilities and AI workloads. Like Taser, the shares blistering transfer is backed by explosive basic progress. Actually, Zacks Consensus Estimates counsel that the corporate will develop its annual earnings by triple-digits by 2027.
Picture Supply: Zacks Funding Analysis
In the meantime, much like the Taser precedent, Sandisk has a singular catalyst. Amid the AI knowledge middle constructing frenzy, demand for NAND know-how is outstripping provide, resulting in juicy margins.
Backside Line
The meteoric rise of Taser within the early 2000s serves as a robust reminder that life-changing fortunes are sometimes discovered by embracing power slightly than looking for bargains. With its back-to-back excessive tight flags and its explosive basic catalysts, Sandisk is following the historic path of Taser in 2003.
Past Nvidia: AI’s Second Wave Is Right here
The AI revolution has already minted millionaires. However the shares everybody is aware of about aren’t prone to preserve delivering the most important earnings. Little-known AI corporations tackling the world’s greatest issues could also be extra profitable within the coming months and years.
QUALCOMM Integrated (QCOM) : Free Inventory Evaluation Report
Sandisk Company (SNDK) : Free Inventory Evaluation Report
Axon Enterprise, Inc (AXON) : Free Inventory Evaluation Report
This text initially printed on Zacks Funding Analysis (zacks.com).
The views and opinions expressed herein are the views and opinions of the creator and don’t essentially replicate these of Nasdaq, Inc.
