My two cloud based security stocks will both release earnings tomorrow at the close of market at 1pm. Both of them have had tremendous run up’s in the stock price and are over 50% for me, but this is exactly what I look for and expect. I track the Stocks 52 week high and you will note my top five stocks are all within 10% of the 52 week high. Human psychology is to sell when we see this with a stock and keep our laggards to “hold on until they come back”, But would you fire your best employee and keep your worst employee? No! The stocks making 52 week high’s are likely to continue making 52 week highs.
Today OKTA Is the only stock I own that is down due to a downgrade by an analyst. His only rationale is that it had a large run up lately in price. Well of course it did after last quarters incredible results. I try not to listen to the analysts as they are usually behind the curve. He may get lucky tomorrow and they may not exceed the estimates that other analysts have set, but I will look for continued accelerating growth to support their hyper growth story the past year.
In particular, I will review the earnings call tomorrow for both of these two security stocks, OKTA and ZS. Among other things, I will compare their revenue % growth against the prior quarter sequentially and the same quarter a year ago to see if their growth is still accelerating. How many new customers do they have? What is their dollar-based net customer retention rate, which will tell me if their existing customers are adding new services, staying the same, or leaving? I want this number to be over 100%, but typically look for something over 130% to show their existing customers are adding functionality and expanding their usage. Are recurring revenues continuing to increase. How does their balance sheet look…in particular how are they managing cash. Is management optimistic and are they giving you any warning’s in the call. I encourage you all to go to the investor relations website for the company and sign up for news alerts, which will include the earnings release. Listen to one if you can, but at least read the earnings report. It will give you an edge on analysts who typically don’t react for several weeks And help you guide you without the emotion of the crowds whether to buy or sell the following day. I will attach the earnings calendar for our stocks following this post. Cheers!!
ZS and OKTA earnings tomorrow
MDB, ESTC & SMAR are all next week on 6/5
User comment: Exciting! I also saw PLAN exceeded expectations. Stock is up 16%
