Why I'm Exiting ZETA & Buying This Undervalued Gem

Closing out ZETA as revenue concerns mount, and rotating into a hidden opportunity with stellar earnings growth, high ROIC, and a compelling valuation.

Hey fellow Sharks,

I'm making an adjustment in Portfolio USA today—closing out my position in Zeta (NYSE: ZETA 0.00%↑ ) and rolling the proceeds into a new opportunity that's checking every box on my checklist.

Here's why ZETA is out:

• The revenue outlook keeps disappointing—Q1 FY25 guidance missed consensus, and worse, its remaining performance obligations (RPOs), a critical forward-looking indicator, keep sliding. Management keeps talking a big game about growing RFPs by 60%, but after multiple quarters of declining RPOs, I’m skeptical this bullish narrative translates into actual growth.

• Profitability growth is decelerating sharply. EBIT margins came in below expectations, weighed down by ramping costs tied to a surge in sales personnel. Zeta might eventually convert these hires into growth, but right now, it's just squeezing margins without clarity on payoff.

Bottom line: The fundamental picture no longer supports staying invested, especially with rising short interest adding volatility. I’m out.

Here's the teaser on what I'm buying:

I’m shifting capital into a name you probably haven't heard much about, yet the financial metrics scream quality and growth:

• Trading at a low P/E (~11x) relative to its robust growth trajectory.

• Consistently high ROIC and ROE.

• 5-year EPS growth (+328%) sharply outpacing revenue growth (+28%).

• Benefiting strongly from industry tailwinds, a differentiated business model with AI integration, and exceptional client retention rates, positioning it well to outperform significantly.

This is a perfect opportunity for my free subscribers to upgrade. Membership at $130/year or $15/month easily pays for itself just from the gains this investment could bring.

Happy investing,

George

Trade details below: