ZS vs TTD, OKTA, TWLO

Investment Analysis Clubs Saul’s Investing Discussions
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Hello,

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.

Thank you.

PS All of my data come from Morningstar and their portfolio/watchlist tool

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I think in the case of ZS it’s more the story than the numbers that is affecting the high P/S. TWLO, TTD, and even OKTA have a path that is fairly straight forward. I believe what is priced into ZS is the idea that they will be able to replace a lot of other cyber security companies, a true disruptor. In my opinion it has the “riskiest” of outcomes vs. the other three.

Personally I find TTD and TWLO’s path more plausible and therefore I bought them early on. I just recently bought ZS but only a small amount. Don’t own OKTA.

Peace,
Dana

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