We are in the early stages of a long and deep recession, says Adam Lass. But that doesn’t mean savvy investors can’t make a profit. Rising unemployment and underfunded local governments is a recipe for crime in urban areas. And that means big business for companies in the self-protection industry. Adam says TASER International (Nasdaq:TASR) stock could triple in the next 18-24 months.

This from Taipan Daily:

It’s certainly no challenge finding stocks under $10 these days. Unfortunately, many of them used to trade for at least twice that much. To make matters worse, in most circumstances, these sad sacks deserve this ignominious fate.

Take your pick: Homebuilders who put up pasteboard shacks alongside highway interchanges and called them “mini-mansions”… banks that sold mortgages to undocumented workers… brokerage houses that bought and sold worthless bonds… retailers who based their business model on the idea that folks could spend twice what they earned forever… credit card companies that figured if they could just charge enough interest, it wouldn’t matter if no one paid off the principle…

Deadbeats, crooks and idiots one and all, each one thoroughly deserving of the punishment the recession has doled out.

Deeper and Longer

Because it is a recession, and not one of those quickie two-quarter deals like we saw around the turn of the century. No, this bout is showing every sign of running deeper and lasting a good bit longer.

As recently as last July, the Pollyannas at the Federal Reserve were still calling for 3% growth per annum as far as the eye could see. Now they have done a complete 180-degree turnaround. Their current estimate for GDP growth in 2008 is now between 0.3% and just plain zero. For 2009, they are now calling for a possible loss of 1.1%.

And they are the optimists in the house. At a recent meeting of Major League Baseball team owners (oh, the sordid places you have go to find the truth!), former Fed Chairman Paul Volcker warned that the recession was a greater threat than had been previously understood, and would in all probability impact even this venerable institution’s bottom line.

Unemployment Scrapes 10%

What threatens to empty baseball’s bleachers? Employers cut another 533,000 jobs in November. Jobless claims haven’t been this high since July 1992, when the U.S. had already been in recession for two quarters. Worse yet, the number of workers still collecting unemployment benefits has risen to over 4 million and has held at this level for three consecutive weeks.

As the economy grinds to a halt, state and local governments are staring at massive deficits totaling some $40 billion. New York and California have already approached Washington D.C. for bailouts that could dwarf anything we have paid to Wall Street.

While annual numbers are not in yet, New York is already complaining of a massive shortfall, with forward deficits through 2010 as high as $14 billion. Nor is the Empire State alone in its misery: just across the bridge and tunnels, New Jersey is already logged in a $258 million deficit in the first four months of the new fiscal year.

Cities Shut Down

As tax receipts collapse, states and cities are shutting down programs willy-nilly: California has already laid off 10,000 part-time and temporary state workers… Ohio is closing two mental health facilities… Rhode Island can’t afford to help out pensioners with discounted electricity and heating oil – just as temperatures dive below freezing… New Jersey is welching on promised property tax breaks… Georgia is closing library branches and denying fire departments new fire trucks.

Does such a dismal forecast as this mean that there are no opportunities about? Nonsense! In bad times, those with both cash and nerve can rule the roost. For example, this very breakdown in both employment and public services offers us a unique opportunity.

When times get this hard, crime skyrockets. And yet local government can do very little to prevent or protect this inevitable wave of both personal and property crime. At best, they can simply record the victims’ stories for the next begging trip to Washington.

Defend Yourself

However, there are private companies that are quite willing to provide citizens with the means of protecting themselves, their families and their property. For example, TASER International Inc. (Nasdaq:TASR) is well known for its easy-to-operate electrical stun devices.

TASER offers two distinct product lines: one for law enforcement, military, corrections and professional security agents, as well as a convenient series of personal protection devices roughly the size of a cell phone that can drop a mugger twitching and writhing to the curb in the most satisfying manner.

These units are the darling of most every police department in the country, as they can be used in circumstances where the safety of officers is at stake without risking the inevitable lawsuits and lost hours that result from firearm discharge.

Shocking Gains

Even better (for TASER anyway), while their professional models can be used over and over again, the personal systems require that you abandon the deployed unit after each use. Who would not replace a tool that just saved your life?

Talk about your permanent market!

But the best part is yet to come: much like virtually every other small tech stock, TASR has been punished mightily in recent days. Since the market collapse began a year ago, shares have been slashed from $19.10 to under $6 today.

Now normally I use stock options to leverage megacap stocks’ relatively small moves into triple-digit gains. However, this time around, I believe that this technique is both unnecessary and limiting.

As crime rises, I am forecasting TASR shares to return to their $20 range. For this opportunity, why risk time decay on a call option contract when simply buying shares of TASR offers one the same sort of triple-digit gains – many times over – during the next 18-24 months?

Source: Shocking Gains From Shocking Times