Cybersecurity leader Zscaler has pulled off a rare trifecta on IBD's premier stock screens, earning a spot on the IBD 50, IBD Big Cap 20 and IBD Sector Leaders. And now with a spot on IBD Leaderboard and the highest-possible 99 Composite Rating, ZS stock has launched a breakout and moved into buy range.
Meanwhile, Israel-based industry peer CyberArk Software took a hit early Monday as CYBR stock and other companies from the country, including Mobileye, fell on news of a surprise terrorist attack by Hamas. CyberArk ended the day in postivie territory and Mobileye came well off its lows following their early declines and news that Israel ordered a "complete siege" in response.
As a new Middle East war breaks out and CyberArk retakes its 50-day moving average, ZS stock and several of its fellow cybersecurity leaders continue to rise. Other top-rated companies from the industry group that jumped Monday include CrowdStrike and Palo Alto Networks. Qualys has edged off the all-time high it hit earlier in today's session.
| Company | Symbol | Comp Rating | EPS % chg last qtr | EPS est cur yr % | Sales % chg last qtr | EPS Rating | RS Rating | SMR Rating | A/D Rating |
|---|---|---|---|---|---|---|---|---|---|
| Zscaler | 99 | 156 | 25 | 43 | 99 | 94 | A | B | |
| Palo Alto Networks | 99 | 80 | 437 | 26 | 98 | 95 | A | B- | |
| CrowdStrike | 99 | 106 | 84 | 37 | 99 | 96 | A | B- | |
| Qualys | 99 | 43 | 24 | 14 | 98 | 95 | A | C+ | |
| CyberArk Software | 94 | 111 | 224 | 24 | 68 | 90 | C | B |
Zscaler Partners With CrowdStrike To Enhance Medical Cybersecurity
Through the Zscaler Zero Trust Exchange platform, Zscaler protects against cyberattacks and data loss by securely connecting users, devices and applications in any location. The Silicon Valley-based firm operates the Zero Trust Exchange, the world's largest in-line cloud security platform, which is distributed across more than 150 data centers globally.
Last month, Zscaler teamed up with CrowdStrike and privately held Imprivata to announce a zero-trust cybersecurity solution that is custom-made for medical institutions. The new Zscaler integration with the Imprivata Digital Identity Platform will provide visibility, threat protection and traceability for end-to-end, multi-user, shared device access control. Such security is required for organizations to meet regulatory requirements, including HIPAA and HITECH, which deal with health issues.
Zscaler Secures Massive Growth
Including a 156% increase in earnings per share to 64 cents in its last fiscal quarter, Zscaler has now generated average earnings-per-share growth of 174% over the last three quarters. Annual earnings growth has averaged 68% over the last three years.
Although the percentage increases have slowed in recent reports, sales growth remains solid and steady. In its last report on Sept. 5, Zscaler drove sales revenue of $455 million, a 43% gain over the prior-year quarter. Sales growth has now ranged from 43% to 63% across the last eight quarterly reports.
In a sign of institutional demand for ZS stock and the cybersecurity industry, Zscaler joined CrowdStrike and Okta on this month's list of new buys by the best mutual funds.
ZS Stock Clears Resistance And Jumps Into Buy Zone
As Zscaler's latest action shows, learning how to read stock charts comes down to understanding support and resistance. The current consolidation for ZS stock is not long enough to qualify as a six-week cup. Yet it has established a floor of support right along its 50-day line and a ceiling of resistance that establishes a 167.50 buy point.
On Monday, ZS stock cleared that buy point and ened the day up more than 3% in heavy and rising volume. Showing market leadership, its relative strength line has spiked sharply higher.
From June until today's breakout, Zscaler did flash bouts of volatility, each time establishing key points of support and resistance. With the Hamas attack on Israel coming on the heels of Friday's follow-through day in the stock market, uncertainty around the nascent uptrend remains.
But ZS stock continues to shake off those worries, as CrowdStrike, PANW stock and even CyberArk also make gains. The market indexes have also showed resilience Monday.
Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
