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Zscaler Stock: The Sell-Off Has Created An Entry Opportunity

Jan. 02, 2022 8:57 PM ETZscaler, Inc. (ZS)12 Comments


  • Zscaler is the leading player in zero-trust security.
  • Its stock was also battered in the recent sell-off. Moreover, it's still trading at a premium against its high-growth SaaS peers.
  • Nevertheless, more aggressive investors can consider adding at the current price level.
  • I do much more than just articles at Ultimate Growth Investing: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »
Zscaler Headquarters

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Investment Thesis

Zscaler, Inc. (NASDAQ:ZS) is the cloud-native, multi-tenant, zero-trust security leader. The company's security platform is developed "on top of a distributed, secure access service edge (SASE) architecture." ZS emphasized that the COVID-19 pandemic accelerated the adoption towards zero-trust security as SVP of cloud protection Rich

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This article was written by

JR Research profile picture

JR Research is a seasoned investor with a background in economics. He focuses on identifying 3 main things - leading growth companies, emerging market trends, and secular growth opportunities. His approach combines price action with fundamentals investing.

He runs the investing group Ultimate Growth Investing which specializes in identifying high-potential opportunities across various sectors. The group is designed for investors seeking to capitalize on emerging, high-growth opportunities, and investors looking for sustainable growth opportunities at a reasonable price.

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of ZS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (12)

Thanks. Zs is a solid company. The valuation metrics are still high. PS of 40+ vs growth of 40% +

What is your thumb rule ? Do you observe rule of 40 for SaaS stocks?
Why was the plug pulled on ZS today. picked up 100 shares at 302, since I couldn’t find any reason to be down some $20 bucks. ? Was that a dumb move….anyone?
Michael Clark profile picture
@Misseditagain Still a bull. Be patient.
@Misseditagain … after today…it was a dumb move. ☹️
Michael Clark profile picture
CGTS. ENTRY POINT was May 18 2020. Up 335.35% since.

1 Short 60 07/30/19 10/23/19 +43.590 +51.48 Exit Short Rule
2 Short 18 02/21/20 03/18/20 +4.340 +7.96 Exit Short Rule
3 Long 408 05/18/20 12/31/21 +247.520 +335.35 Open

Still no top.
Crowdstrike a much better buy at the moment imo.
Much higher sales, earnings, and a faster growth rate. Yet it has the same market cap as zscaler. It should be much higher imo.
JR Research profile picture
@Cgain CRWD is a good company. ZS is certainly more expensive. But, ZS and CRWD are quite different even though both are in cloud security. Nevertheless, CRWD buy point looks solid too.
@JR Research CRWD has had a couple of earnings missteps; management somewhat of a question mark. need to see more consistency.
JR Research profile picture
@decoder2 That is true. But, the stock's valuation seems to have been punished for it.
Valuations don’t matter?
Hudson Investments profile picture
@Roger Thaat Yes valuations definitely do matter. ZS consistently beats earnings by 50%, that’s what I like about ZS, and am buying some today.

Their main customer is the US DOD, as you know. That means something significant.
Hudson Investments profile picture
This is what you call an aggressive bet.
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