One of the biggest myths in the stock market is the disclaimer – "Past performance is no indicator of future performance."

This is what you hear the “smart” money say to you so that they can get you to pay them to manage your money.

Not only is it not true, but the opposite is true. Past performance is the BEST indicator of future performance.

One conclusion from this myth is that you shouldn’t buy stocks in front of an earnings report.

This may or may not be true if we are talking about just any stock.

If, however, we can find a company that has been crushing numbers, the stock is still in an uptrend, AND it has become materially oversold before the earnings report, we think these are great potential opportunities.

We are publishing this week’s HX Trader several days early to get in front of one of these events.

Here is the idea…

The company is safety technology firm Axon Enterprise, Inc. (NASDAQ: AXON).

Based in my hometown of Scottsdale, AZ, this company is best known for its Taser electroshock product. The company was founded back in 1969 by a NASA researcher looking to develop a non-lethal electric weapon as an alternative to firearms.

Initially, it was branded the "Tom Swift Electric Rifle" (TSER), referencing the 1911 novel Tom Swift and his Electric Rifle. He then added "A" to the acronym to make it easier to pronounce, and it became "TASER.”

Today, they manufacture a wide range of safety products beyond just the TASER products. This includes body cameras, evidence databases, drones, and robotics.

In recent years, the business has experienced tremendous growth.

The table shows their earnings per share or "EPS" results over the last ten years…

Over this period, they have grown EPS over twelve-fold. This is tremendous growth.

When companies see this kind of growth, they usually are benefiting from strong operating momentum.

During these periods of strong growth, the companies often beat analysts' expectations on their quarterly earnings reports. Companies that do this are usually good stocks.

Here is the company's track record of earnings reports over the last few years…

The company has not only been beating numbers but crushing them!

This kind of operating momentum also leads analysts to raise their EPS numbers. When they do this, it is called "positive earnings revisions,” and this is the most potent driver of stock prices in the near term.

Here is a chart showing the stock price of AXON stock along with the analysts’ estimates for 2025 EPS…

Numbers have gone up for the last 18 months. On the chart, you can see that the stock has followed suit.

Strong EPS growth, crushing numbers, and rising estimates almost always lead to strong stock price performance.

Here is a chart showing the stock price for AXON over the last decade…

Like their earnings results, the stock has seen some incredible results. At its recent high of over $700 per share earlier this year, the stock had increased a remarkable 27 times (!) from where it was in early 2018.

Look closely at the chart, though, and you will see the stock has recently been hit hard.

Here is a shorter-term stock price chart along with our most useful tactical technical indicator – the relative strength index or "RSI" …

After hitting that new all-time high of $715 just last week, the stock has sold off to roughly $500 per share or an amazing -30% in less than a week.

What is going on?

The only news out there was a recent downgrade by a brokerage on valuation. That downgrade wasn't concerned about the operations, but rather the stock price.

The stock was up considerably in recent months, and with the recent stock market sell-off, it was vulnerable.

This is one of the challenges with “momentum” stocks. They can make you a lot of money quickly, but they can also correct painfully in the same way.

This is what we think is happening right now with AXON stock.

The opportunity is that the company – which has been crushing numbers – will report EPS tomorrow after the close.

Given their last few years of results, we are confident they will report another good number.

If the stock was at its highs like last week, we wouldn't have any interest. With the stock, however, having sold off and reached a profoundly oversold RSI level, we like the risk/reward of the trade.

The stock has now traded below a 28 RSI level, and here is what it has done AFTER it has traded below this level in the past…

If you bought the stock at these levels and looked out three months, you have made an average double-digit return and made money almost three-quarters of the time.

We would emphasize that buying a very volatile stock before an EPS report is not for the faint of heart!

At HX Research, though, we play the odds, and this trade looks like a great one.

We think there are potentially shocking profits for our readers, and we would buy this stock today.