ShotSpotter (SSTI) vs. Axon Enterprise (AXON): Which one is a better buy?

​Key Points

• Higher than expected consumer prices spooked investors and sent the stock market indices into a deep red.
• ShotSpotter (SSTI), Axon Enterprise's (AXON) competitor, jumped more than 25% after an excellent Q1 performance.
• Alternative wood manufacturer Trex Co (TREX) fell more than 6% despite a solid quarterly earnings report.

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Overall market

Higher Than Expected Consumer Prices Spooked Investors and Sent The Stock Market Indices into a Deep Red.

​All three indices finished Wednesday in the red. The highly-anticipated Consumer Price Index report came out and showed a more than 4% jump in all-items prices in April. The jump was higher than expected and spooked investors enough to send all three indices deep in the red.

Some of the reasons behind the high prices are temporary, including the impact of the chip shortages and backlog in shipping caused by the Suez Canal blockage back in March. Investors' sentiments still remain quite negative, and that was enough to drag the indices into the red zone for the 3rd day in a row. 

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What's Up

ShotSpotter(SSTI) vs. Axon Enterprise (AXON): Which One is a Better Buy?

Considering the drop in the stock market indices, I was pretty curious to see which companies ended in the green today. Excluding penny stocks and OTCs, nearly 1,084 companies finished Wednesday higher than where they started. 

The company that grabbed my attention in a small company called ShotSpotter Inc (SSTI). It provides technology solutions for law enforcement and security personnel. The stock price jumped more than 25% today after the company announced an excellent quarterly earnings report. 

This is an excellent company to watch. It's a competitor to Axon Enterprise (AXON), with more than $8 billion in market capitalization. ShotSpotter is just expanding to new cities, and has the opportunity to steal market share from Axon. 

Compare the two companies' Stock Cards side-by-side, and you can see both companies benefit from a growing industry and have solid operations. However, Axon is priced quite aggressively based on its more than 1000 times price to free cash flow ratio. Also, other valuation ratios are higher for Axon vs. ShotSpotter. 

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​What's Down

Trex Co. (TREX) Stock Retreated Despite an Excellent Quarterly Earnings Report

With the rise of home prices and rapidly increasing prices in home building material, I was surprised to see shares of Trex (TREX) were down more than 6% today. This company manufactures wooden alternative-decking products for your patio and deck. It's been an excellent investment in the last few years.
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It seems investors are selling some shares to lock their gains after a few financial analysts maintained a hold or neutral rating. In a way, investors believe there is not much upside left to Trex's stock price. 

I don't think there is anything wrong with taking some profit. But, also remember, home renovation and home building, and commercial real estate are some of the foundations of a healthy economy. In my opinion, long-term investors should hold, especially if your investment horizon is a decade or longer. 

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