Our top idea in cybersecurity, and an existing Inner Circle High Beta stock pick.
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Rules Is Rules
There is really only one rule that matters in technology, and that is that the cheapest acceptable solution will usually win. Technology production and consumption - particularly by professional buyers ie. enterprise customers - is the story of the cost curve. The faster you can deliver 10x performance at 1/10th the price, the sooner you become the next tech stock darling. And one of the ways to achieve this kind of cost scaling is to reduce the number of nodes on which your product has to be installed; and to reduce the number of truck rolls or Accenture consultant visits that your product requires to go live.
In cybersecurity, the name everyone knows and celebrates is CrowdStrike ($CRWD) and it is a fine business, no argument. At present I have no position, having banked some 50% gains in its recent upswing, but I am confident I will one day again be a CrowdStrike shareholder. The company has solid growth, high cashflow margins, plenty of revenue visibility, all good. Aside from a penchant for expensive advertising - F1, anyone? - there's a lot to like about the company.
But the company we think has the longest runway is Zscaler ($ZS). And that's because, one, it adheres to the cost-curve rule, two, the CEO is a five-time-successful founder, three, the financials are exceptionally strong and four, cybersecurity remains a segment that appears set for multi-decade growth.
For our paying members here we go on to discuss these points in more depth, we review the recent earnings and earnings outlook, revisit the stock chart, our price targets and ratings. If you're yet to become a paying member of Cestrian Inner Circle, you can do so right from the button below.