This column is for investors willing to take more risk and potentially receive more reward.  The stocks mentioned in this column are not recommended to buy or sell.  They're brought to your attention so you can investigate them further to determine if they fit your risk profile.  Most of the stocks will have less than $1 billion of market capitalization, have more volatility than other stocks, and oftentimes no earnings.  And some will have tremendous stories.

June 25, 2008 - Taser International (TASR-NASDAQ) aims to take an assailant down but not out. The company designs and makes the TASER line of stun guns. When engaged, the gun delivers a high-voltage surge of electrical pulses to the target. These electronic pulses are designed to affect the central nervous system and incapacitate an individual for about five seconds. TASER sells its weapons to law enforcement agencies and the military in the US and 50 countries, and also offers a tamer version of the electronic control device to the public. The company discontinued its very first system, the AIR TASER product, in 2003.

Here's one: A director of Taser sold 50,000 shares of common stock, according to a Securities and Exchange Commission filing Tuesday. In a Form 4 filed with the SEC, Bruce R. Culver reported he sold the shares last Friday for $5.79 apiece. This director has been selling since the beginning of June, in lots of 2500, 20,000, 17,500, 50,000 and 100,000.
After these sales, he still owns about a million shares. So he's not getting out of the stock completely.

Still, investors have to wonder why a director would sell near the bottom of the price range for a stock, a level not seen since 2005, if he's bullish on the company. There was no comment with the sale. Just the filing information. Directors (and other insiders) usually sell to diversify their holdings, to pay taxes, buy something large, or any number of reasons. However, when one or several sell a relatively large amount in a short period of time, investors begin to wonder what the insider knows that no one else does. Could there be trouble just ahead?

Maybe. But according to the filings no other insider is selling. It suggests his sales were for personal reasons. If more insiders start to let stock go, then the red flag will start flying.

The fundamentals for the stock look pretty good after this year. Analysts see 16 cents a share this year in earnings (with a range of 8 to 25 cents), down from 23 cents a share last year which more than doubled earnings from 2006. Next year, they project 34 cents a share with a range of 24 to 45 cents.

Revenues should continue to climb. Last year sales were $100.7 million. This year analysts see $116.03 million (with a range of $107 to $132 million). Next year, the consensus is for $141.44 million (with a range of $132.14 million to $165 million). In the first quarter, sales were up 47% thanks to international orders. In total, foreign sales increased by 64% from a year earlier to almost $3 million.

One other concern for investors: lawsuits. The company successfully defended itself against 67 wrongful death suits or injury so far. The legal hassles won't go away. Expect more of them. The first one the company loses will open the door for many more and old ones reviewed. That's the biggest problem with owning this stock. That cloud isn't clearing on the horizon.

On the plus side are the orders. While not as robust in this economy (public agencies won't have the budgets this year that they've had in the past), new orders continue to grow. Sales are also increasing overseas as the company goes global. Furthermore, cartridges and accessories will add to revenues.

The company will most likely increase Research and Development expenses as it looks to improve its product portfolio. That means lower profit margins for the near term (Net Operating Margin was 22.7% last year...this year look for 20%).

Some other positive numbers: Strong financial position with current assets more than 9 times current liabilities. Return on Equity of 12.5%. No long term debt. Book Value will be $2.10 by the end of this year. Net profit margin was 14.9% last year with analysts seeing 13.6% this year.

Taser is an interesting stock. It has a lot of good going for it, not least of which is increasing sales and earnings. It's a little troubling to see one director selling a fairly large amount of stock, but there's only one. Also, those lawsuits will forever plague the company, part of the cost of doing business. Now that it's trading so close to some meaningful lows, it's a stock worth digging into further.

- Company Web site: www.taser.com

- Ted Allrich