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Aaron Bush Taser Pitch

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Foolish intern Aaron Bush recently put together a slide deck on Taser International as a potential investment idea.

Foolish intern Aaron Bush recently put together a slide deck on Taser International as a potential investment idea.

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Transcript

  • 1. Aaron Bush July 10, 2014 TASER International (NasdaqGS: TASR)
  • 2. The Business • Police Departments • Militaries • Self Defense • New Categories • Axon Cameras • Evidence.com
  • 3. RB Sell Recommendation “Recent court rulings have shown more favor for plaintiffs, and any case that draws a straight line between Taser and serious injury or death would cripple sales -- and possibly the company. But the central issue is money, and to make it, Taser is dependent on government buying. Growth investing pioneer Philip Fisher warned against such situations, and this inconsistent stream of revenue isn't enough to compensate for the legal risk. We recommend selling Taser.”
  • 4. The Breakdown: 68.1 28.2 3.7 2011 Weapons Cartidges Evidence.com & Video 66.4 28.6 5 2012 Weapons Cartidges Evidence.com & Video 66.6 25.9 7.5 2013 Weapons Cartidges Evidence.com & Video By CategoryBy Location 80 20 2011 Domestic International 81 19 2012 Domestic International 84 16 2013 Domestic International
  • 5. • Dominant market leader • Innovative culture • Strong patent protection • Important connections Competitive Advantages Does more good than you think!
  • 6. • Significant upgrade opportunity • Largely untapped international markets • AXON-Evidence.com • SaaS, recurring revenue • Strong balance sheet • Strong IP, brand, and customer relationships • Share repurchases • 24% of shares outstanding bought back since 1/1/2011 Investment Drivers
  • 7. Miscellaneous (Rapid Fire) -20 0 20 40 60 80 100 120 140 160 1 2 3 4 5 -10% -5% 0% 5% 10% 15% Growth & Profitability Rev Net income Profit Margin -10% -5% 0% 5% 10% 15% 20% 1 2 3 4 5 ROE -10% -5% 0% 5% 10% 15% 20% 25% 1 2 3 4 5 FCF/Revenue 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 1 2 3 4 5 Inventory Turnover 0 20 40 60 80 100 120 140 160 180 1 2 3 4 5 CCC
  • 8. • Technological disruption • New products may underperform • Upgrade rate may decelerate • International attempts may flop • Regulations may restrain growth Risks
  • 9. • Taser remains the dominant, innovative market leader • The Taser of the future is not the Taser of yesterday • New technologies are rapidly catching on • There are still hurdles to overcome • Valuation: $2.3 billion (+300% ± a lot) In Conclusion

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