PANW ZM: Macro Is Driving Things But Stock Selection Still Matters

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Cybersecurity firm Palo Alto Networks (PANW) is a great stock. It’s one of the few I follow that really has not broken down – yet – during this nasty bear market. And Monday afternoon’s 2Q22 earnings report was a winner with the stock likely to rise significantly Tuesday.

Revenue was +27% and EPS +49%. This quarter marked the end of their fiscal year and they provided excellent guidance for FY23. PANW expects revenue and EPS to each grow another 25% this fiscal year. Shares are currently +8% in the after hours. So while macro is driving things at the moment there are a few great companies that are cutting through the headwinds and continuing to deliver excellent results.

Zoom (ZM) is an example of a stock that is getting crushed by multiple macro headwinds. First the pandemic was a huge boon for them. The reopening has seen their growth essentially disappear. Second rising interest rates have contracted what was a huge multiple. In their 2Q22 reported Monday afternoon Revenue was +8% and EPS -23%. They also reduced full year revenue and earnings guidance. Shares are currently -9% in the after hours.

Macro is driving things right now – and will continue to for the foreseeable future – but there are a few great companies that will continue to deliver excellent fundamentals despite the headwinds. That’s why I’ve always preferred an investing style that integrates all the perennial philosophies: Fundamental, Technical and Macro.

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