ZS and FSLY

Investment Analysis Clubs Saul’s Investing Discussions
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Cramer is going to interview the CEO’s of ZS and FSLY tonight on his Mad Money show.

Rob

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The jettisoning of ZS like TWLO and ESTC have not been good decisions in my mind.

Certainly CRWD and DDOG are on their initial launch and moneys should be in those but sometimes apparent slowing (and the inevitable slowing after the initial drive up) or some hiccups with management should not automatically deter us from the long term prospects of these businesses.

tj

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but sometimes apparent slowing (and the inevitable slowing after the initial drive up) or some hiccups with management should not automatically deter us from the long term prospects of these businesses.

tj- I think one of the considerations is whether you want to be in any particular stock for the long term, as opposed to wanting to be in a stock because it is performing well and in high-growth mode currently. There are so many great high-growth companies out there to invest in but, for me at least, I want to be in the ones in which I don’t have to wait around for if and when their performance improves. Just my view.

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ZS, our fallen angel, showing signs of life again.

Revenue Growth last 4 quarters yoy (%)
53.28, 47.87, 36.29, 39.64

Gross margin dropped a tad (%)
81, 79, 80, 77.7

Management shared that they are on track to expand sales rep headcount by 60% by July.
That’s a sign of confidence.

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The reason they are increasing headcount is to be more aggressive about bringing more customers in. It’s more of a “do or die” than being confident.

All this time we are told “customers are coming to us” yet at the same time they have to revamp their Salesforce due to declining sales growth.

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yes the long term.

Of the old names that were ‘mistakenly dropped’, I need to add SHOP and SQ to that list. I believe these are really long term businesses, and more so than ZS and ESTC.
That is why I did not sell them but have increased my share in SHOP and SQ and in TWLO in the past months (along with CRWD and DDOG).
ANET is one that I have kept and added a tiny bit in late March. I think the up cycle for ANET is going to come back soon.

tj

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