Axon Enterprise (AXON -1.66%) has been one of the most successful under-the-radar stock market investments of this century. The company, best known for its Taser line of stun guns and other law enforcement technology products, went public in 2001.
Since that time, the stock has produced a total return of 105,000%. This means that a $10,000 investment in Axon's IPO would be worth about $10.5 million today.
2 important lessons to learn
While there's no magic formula that can predict the next stock that will multiply investors' money by 1,000 in less than a quarter-century, there are a couple of very important lessons you can learn from Axon's stellar performance.
First is that great businesses can keep performing well. Just to name one point in time, many experts thought Axon was too expensive in 2021, when it was trading for about one-third of its current price. This is a business with a dominant share of its core market, with great customer relationships, that has a strong history of innovation.
Second is that even for a fantastic business like Axon, the path to investment success isn't likely to be a straight one. In less than 25 years as a publicly traded company, Axon has drawn down by 40% or more from a recent high seven times. It has experienced 80% or greater drawdowns twice.
In fact, Axon stock plunged by more than 80% from its 2004 peak and didn't reach a new all-time high until 2015. However, management kept executing during this period, growing revenue by more than 700%. So if the business keeps getting stronger, it's important to not get discouraged by fluctuations in the stock price.
The bottom line is that not only is Axon a tremendous performer for long-term investors, but there are also some important lessons all investors can learn from it.
