• Zscaler (ZS) shows strong technical momentum and is trading above all its moving averages
• ZS stock has recently hit multiple new highs.
• Revenue is projected to grow over 20% annually for two years.
• Zscaler is a momentum play with broad investor support, but due to volatility, strict risk management and stop-loss discipline are advised.

Today’s Featured Stock:

Valued at $39.1 billion, Zscaler (ZS) is one of the world’s leading providers of cloud-based security solutions. Zscaler offers a full range of enterprise network security services including web security, internet security, antivirus, vulnerability management, firewalls, and control over user activity in mobile, cloud computing, and Internet of Things environments. 

What I’m Watching:

I found today’s Chart of the Day by using Barchart’s powerful screening functions. I sorted for stocks with the highest technical buy signals, superior current momentum in both strength and direction, and a Trend Seeker “buy” signal. I then used Barchart’s Flipcharts feature to review the charts for consistent price appreciation. ZS checks those boxes. Since the Trend Seeker signaled a buy on April 28, the stock has gained 14.88%.

On the chart, you can note that the stock is trading above all of its daily moving averages and has rising prices on steady volume.

ZS Price vs. Daily Moving Averages:

Barchart Technical Indicators for Zscaler:

Editor’s Note: The technical indicators below are updated live during the session every 20 minutes and can therefore change each day as the market fluctuates. The indicator numbers shown below therefore may not match what you see live on the Barchart.com website when you read this report. These technical indicators form the Barchart Opinion on a particular stock.

When a stock is trading above all of its daily moving averages and closed within 0.45% of its 52-week high, it won’t take much to hit another new high.

• Zscaler has a 100% technical “Buy” signal.
• The stock closed at $252.57 on May 19, above its 50-day moving average of $211.49.
• ZS has a Weighted Alpha of +57.81.
• The stock has gained 39.3% over the past year.
• Trend Seeker “Buy” signal intact.
• ZS is trading above its 20, 50 and 100-day moving averages.
• The stock has made 14 new highs and is up 25.1% in the last month.
• The 14-day Relative Strength Index is at 78.22%.
• The technical support level is at $248.67.

Follow the Fundamentals:

• $39.1 billion market cap.
• Revenue is projected to grow 22.34% this year and another 20.37% next year.
• Earnings are estimated to increase 7.78% this year and an additional 13.75% next year.

Analyst and Investor Sentiment on Zscaler:

I don’t buy stocks because everyone else is buying, but I do realize that if major firms and investors are dumping a stock, it’s hard to make money swimming against the tide.

It looks like not only Wall Street analysts, but also many of the popular investing advisory services, are moderately bullish on this stock.

• Wall Street analysts tracked by Barchart issued 29 “Strong Buy,” two “Moderate Buy,” and nine “Hold” opinions on the stock with a price target of $242.26.
• Value Line gives the stock an average rating.
• CFRA’s MarketScope gives the stock a “Hold.”
• MorningStar thinks the stock is 13% overvalued.
• Of the1,372 individual investors following the stock on Motley Fool, 1,291 think the stock will beat the market, while 81 think it won’t.
• 64,410 investors monitor the stock on Seeking Alpha, which rates the stock a “Hold.”

The Bottom Line:

Zscaler currently has momentum and support from both the market and individual investors.

Additional disclosure: The Barchart of the Day highlights stocks that are experiencing exceptional current price appreciation. They are not intended to be buy recommendations as these stocks are extremely volatile and speculative. Should you decide to add one of these stocks to your investment portfolio it is highly suggested you follow a predetermined diversification and moving stop loss discipline that is consistent with your personal investment risk tolerance and reevaluate your stop losses at least on a weekly basis.