In the video, Stephanie Link discusses the current stock market, emphasizing the importance of diverse investment strategies and the potential for recovery in underperforming stocks, particularly highlighting Zscaler in the cybersecurity sector. She believes that cybersecurity will surpass artificial intelligence in market size and expresses confidence in the long-term growth of the industry, despite its cyclical nature and recent struggles.
In the video, Stephanie Link discusses the current state of the stock market, particularly focusing on breakout stocks and the importance of having trades that may not always work out. She emphasizes that unsuccessful trades do not necessarily indicate a flaw in the company or strategy, but rather are a normal part of investing. Link highlights the need for investors to have diverse strategies and to consider stocks that have underperformed, as they may present opportunities for future gains.
Link specifically mentions Zscaler, a cybersecurity company that has seen a significant decline in its stock price, being down 7% year-to-date. She notes that Zscaler is currently the worst performer among its peers but believes that the total addressable market for cybersecurity is substantial. Link expresses her conviction that cybersecurity will ultimately become a larger market than artificial intelligence, indicating her long-term bullish outlook on the sector.
She shares her investment strategy of looking for stocks that have struggled in the past year, with the hope of identifying potential rebounds in 2025. Alongside Zscaler, Link mentions her interest in adding to positions in Boeing, Las Vegas Sands, and Target, all of which have also performed poorly. She believes that the fundamentals and valuations of these companies could support a recovery.
Link discusses the broader landscape of the cybersecurity industry, noting that there are too many vendors and a lack of communication among them, which could lead to significant consolidation in the market. She points out that Zscaler recently beat earnings expectations and saw a 50% increase in operating profits for the quarter, suggesting that the company is on a path to recovery despite its current struggles.
Finally, Link reflects on the cyclical nature of cybersecurity stocks, noting that they can experience both good and bad years. She draws parallels to other companies in the sector, such as CrowdStrike and Fortinet, which have had their ups and downs. Link believes that the largest players in the cybersecurity market will continue to grow, similar to how mature companies like Cisco have sought growth opportunities, reinforcing her confidence in the long-term potential of cybersecurity investments.