Upcoming Earnings:
Dec 3: ZS
Dec 4: ESTC & SMAR
Dec 5: CRWD & OKTA
Dec 9: MDB
Couple big movers today…especially ZS up 10%. About time! Next weeks earnings call on December 3rd Will be revealing. This stock price has been compressed a lot and if the company continues its growth and performance, this company could go on a tear higher. If they stumble, all bets are off. Today’s move higher is based on an upgrade by Bank of America to a “buy” rating. They have two other upgrades by other banks in the last week. It doesn’t take Einstein to make that call when the stock is already down 35% this quarter due to valuation concerns and sector rotation that transpired in Aug/Sep. I have not sold my shares (many purchased around $40 over a year ago) and do not plan to before earnings. The last 5 quarters of revenue growth have been better than 99.9% of companies out there…(most recent quarter and full year at the bottom):
Q/Q. Y/Y
54.0% 51.4%
58.6% 53.9%
65.1% 57.4%
61.0% 60.0%
53.2% 59.2%
For that kind of growth, naturally they are also valued at 14x sales, which is very high. These are the type of companies I like to invest in: Incredible growth stories, recurring revenues, gross margins above 81%, huge deferred revenues, relative moats around their tech, redefining the way business is done and literally creating the picks and shovels of this digital revolution…security for ZS. Their earnings call on Dec 3 will is widely anticipated and they are already up 10% today in anticipation, so I hope they continue to blow the doors off when they announce. If ZS retraces just half their drop from the high of $90/share in July, that will represent more than a 50% surge from yesterday’s closing price. If they stumble, I expect a 10 point (20%) drop back to $40. I picked up some call options (an options bet that they will go higher than $50) last week and have not sold any of my company shares. ZS is the 4th largest holding in this stock portfolio representing around 10% of the total.
Cheers!
