Looking forward to this weeks earnings, hoping SaaS and my longs will make a comeback
Looking forward to:
  • $CHKP(just curious)
  • $AMD (curious to learn more)
  • $SBUX (Have a coffee there nearly everyday, never bought the stock, good candidate)
  • $RACE getting into autos, so learning more about Ferrari and $POAHY
  • $MRNA - bullish and I own it
  • $HOOD - cheap high margin business, need to see if financials improve
  • $MELI - Long
  • $FTNT - Incredible capital allocators, I learn a lot from them
  • $DDOG - Own it and long
  • $TWLO - Own it and long
  • $NET - Own it and long

I learn a lot from looking at companies I don't own, so I like to observe and learn a lot!
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Abstract Investor's avatar
$15.7m follower assets
Sales Acceleration As A Bullish Indicator (Cybersecurity Stocks)
One indicator I've always found useful for portfolio allocation is sales acceleration. Analysts and management often guide declining YoY % sales growth, and in rare cases, the guide doesn't line up with other indicators. When sales accelerate, it can be a powerful catalyst for stock-price action, manifesting in some momentum or a rally.

See the chart here of cybersecurity stocks below:

Old-guard - (Value style)

New Disrupters - (Growth style)
  • $ZS - Zscaler
  • $CRWD - Crowdstrike
  • $S - SentinelOne

Cutting short, old guards have outperformed disrupters/high-growth substantially over the last year. A big variable was the rotation to value from growth, but I also think another factor for substantial outperformance was sales acceleration. One would expect older cybersecurity to coincide with performance against the QQQ. However, stocks like Palo Alto and Fortinet flew past the benchmark delivering serious alpha. Both went from low ~20% YoY growth to ~30% YoY growth over the last few quarters.

Quarterly YoY % growth (top), and 1-yr return (bottom)

The graph above shows some of these relationships. Lines going higher show sales accel across quarters on a YoY basis, and down means deceleration. I'll be the first to mention that this relationship is not perfect, and there are many reasons for the performance discrepancy above - but it's worth thinking about.

If one can find sales acceleration above consensus for a stock or two on one's list, there are mid-term opportunities out there to capitalize on. For a growth stock, it means the future is coming through faster. In many cases, the rally is strong enough to overshoot fundamental rationale and produce outsized returns over the mid-term.

P.S. Using this theory, $OKTA is looking like an interesting candidate at the moment.
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Cybersecurity Supremacy
Cybersecurity spending isn’t slowing down!

Palo Alto Networks $PANW reported earnings yesterday posting:

  • Adj. EPS of $1.79 vs. $1.68 expected
  • Revenue of $1.39B vs. $1.36B expected

A rare double beat for this earnings season. As a result, $PANW was up over 12% after-hours.

The cybersecurity industry is projected to be worth around $146B by the end of the year. Statista expects this industry to grow at an annual rate of 9.7% until 2026.

With tailwinds like these, cybersecurity stocks are in a great position over the next few years.

We can see this stability ourselves by looking at revenue growth for companies in this sector.

Crowdstrike $CRWD is the only stock to see its revenue growth decline over the past two years, but it is still at 63%!

Even with these tailwinds, cybersecurity stocks have been hit hard in the recent sell-off. Only Check Point $CHKP has stayed out of a bear market level down 19% from previous highs.

After this sell-off here is how these stocks currently compare based on revenue multiples and their respective growth rates.

Do you have a favorite cybersecurity stock? Which one? Tell us below!
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Alberto Wallis's avatar
$23.8m follower assets
Big Week Ahead! (Oct 25-29 Earnings Calendar)
Next week will probably be the most interesting week for the stock market this quarter. The largest companies in the world are all reporting and we'll get a lot of very valuable insights.

Here's what I'm interested in:
  • More context on the slowdown in ad spending from $FB $GOOG and $TWTR. Let's see if these companies are experiencing similar issues to the ones $SNAP mentioned yesterday.
  • Comments on the global supply chain issues from $KMB $MMM $GLW $LOGI and others.
  • A general update from $AMD $TDOC $SHOP and$AMZN.
  • Perspectives on the energy market from $XOM $CVX

Comment below what earnings call you're looking forward to!

Remember you can automatically sync your portfolio's earning dates to your personal calendar with just a couple of clicks here.





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