Wouldn’t it be nice to have the gift of foresight when making investments – to know when events will make some product or service virtually indispensable?
Some people do seem to have that talent but not many. To enjoy that kind of success, one sometimes seems to need something like Biff’s sports almanac in “Back to the Future II” to know the outcomes of future events – or at least to be in the right place at the right time.
Digital Ally (DGLY, Financial) may well have been in the right place at the right time – with the right products. Digital Ally supplies police officers with video cameras. The Kansas-based company makes wearable police cameras, vehicle video systems and flashlights that double as camcorders. In the wake of the shooting of 18-year-old Michael Brown in Ferguson, Mo., on August 9, inquiries into the company’s products went up fivefold, the company told USA Today.
That has translated into huge gains for Digital Ally in a short period. At the time of Brown’s death, shares of Digital Ally sold for $3.83. Shares went up nearly 400% in the next three weeks, USA Today reported, then jumped another 79% following the Labor Day weekend.
Last week, Digital Ally received a $1.1 million order from the Michigan State Police that raised the company’s existing contract with the agency to $6.5 million. Digital Ally’s CEO told USA Today that revenue for the fiscal year was on pace to go up more than 25%.
Use of such equipment seems to have no downside. A year-long Cambridge University study of the police department in Rialto, Calif., which implemented wearable police cameras, found that use-of-force incidents dropped by nearly 60%, and related complaints went down nearly 90%.
Does this mean that such cameras will be in even greater demand in the near future? Not necessarily.
“Investors may be getting ahead of themselves,” CNN reported. “Digital Ally reported a loss last quarter, and its revenue fell by 32%. The company … blamed municipal government budget constraints.”
Competitor Taser International (TASR) has been “making strides in its wearable police cameras business as well and sports a market capitalization of over $900 million,” CNN said, but Taser’s stock price is up about 45%. “That's very good,” CNN acknowledged, “but it's not the skyrocketing performance of Digital Ally.”
Another competitor, Image Sensing Systems (ISNS), has benefited from the publicity surrounding the shooting. Its stock price has increased more than 100%. Like Digital Ally, though, Image Sensing experienced a loss last quarter.
