Camera-makers shares jump on interest in surveillance tech

A surge in interest in makers of security cameras drove shares of such companies higher on Tuesday, with heavy volume in particular seen in Digital Ally, which makes wearable cameras.

Digital Ally, which produces cameras compact enough to be pinned to shirts, belts or eyeglasses, has reported heightened demand for its product since Aug. 9, when a white police officer shot and killed an unarmed black teen in Ferguson, Missouri, triggering weeks of protests.

Interest in surveillance technology also drove investors to put money in Image Sensing Systems, a company that produces software and cameras for law enforcement agencies and traffic monitors. The stock spiked more than 40 percent.

A Digitally Ally camera on a police motorcycle
Source: Digital Ally | Facebook
A Digitally Ally camera on a police motorcycle

Both companies have seen greater-than-usual volume as well. Nearly 10 million shares of Digital Ally changed hands on Tuesday, while Image Sensing Systems has seen 1.9 million shares traded, the first time in its history it has seen a daily trade of more than a million shares.

Vicon Industries, which also designs and makes video security and surveillance systems, was active as well. Shares rose more than 40 percent.

Read MoreThree things that could derail GoPro

Digital Ally shares have more than doubled in value since they closed at $7.08 last Tuesday. Between August 2009 and June 2014, the stock's average daily volume was only about 13,000 shares.

An increasing number of traders believe the stock can't maintain this momentum. The number of Digital Ally shares being borrowed for short bets has tripled over the last few days to about 1 million, said Timothy Smith, executive vice president of SunGard's Astec Analytics in New York.

Read MoreThese start-ups make your smartphone, smarter

The cost of borrowing securities are currently in the 100 percent range, which means it would cost the full value of the shares per year in order to maintain such a short bet.

More than 147,000 people have signed a White House petition calling for legislation that would require state, county and local police to wear cameras on the job.

—By Reuters