this is my first post on this board, please bear with me. I have a watchlist of companies that I am interested in. Among many others there are these four in no particular order: TTD, OKTA, TWLO, ZS.
All of these are IMO great companies with similar market cap (bn: 9, 9, 16, 9), same growth rate (3y: 61, 66, 57, 52). All of them have significant growth possibilities, large markets. Yet one is traded at significantly different P/S ratio (20, 22, 19, 36).
Questions I have:
- If you would invest, would you ever prefer ZS over TTD, OKTA, TWLO? Why? Are there any fundamentals (like numbers) I am missing or is this more faith in the leadership, superiority of the product (over the other three companies), knowledge of the specific industry vertical, or something else?
- Since there is no p/e for these companies and hence no peg, would you think that PSG (P/S divided by historical growth) make sense? With this metric ZS seems so much more expensive compared to the other three stocks. PSG for the stocks discussed (x100): 32, 33, 34, 68 using 3-year revenue growth
Again, I have nothing against ZS (I think they are great), however as an investor I would just go with the other companies and wait for ZS to get more reasonable valuation (at best for the same growth). My reasoning would be that everything else equal I have probabilistically more upside potential with TTD, OKTA, TWLO when compared to ZS. They all might go 100% or 200% up in a year or two (I sure hope they do), it just seems less likely for ZS.
Any insight into your reasoning on this is greatly appreciated.
PS All of my data come from Morningstar and their portfolio/watchlist tool