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The Insider Edge: How Ownership and Efficiency Are Fueling 2025's Hidden Growth Stars

Philip CarterSaturday, May 17, 2025 2:37 am ET

91min read

In a market rife with volatility, investors are often left scrambling for clarity. Yet, two metrics—insider ownership and return on equity (ROE)—act as beacons for identifying undervalued companies poised for explosive growth. Among today’s contenders, Duolingo (DUOL), Workday (WDAY), and Zscaler (ZS) stand out. With insider ownership exceeding 14–19.6% and projected ROE of 21–27% by 2028, these firms exemplify insider alignment and operational excellence, positioning them to outpace the S&P 500’s anemic 12–15% ROE trajectory. Let’s dissect why these stocks are buying opportunities now.

The Power of Skin in the Game: Insider Ownership as a Trust Signal

When executives and directors hold significant stakes in their companies, it’s a clear sign of confidence in their vision. Consider:
- Duolingo: 14.3% insider ownership, despite CEO Luis von Ahn selling his entire holdings in April . While this might raise eyebrows, it’s critical to note that 85% of shares remain in aligned hands, including CTO Severin Hacker (72 shares post-sale) and Natalie Glance (127,381 shares post-April sale). The CEO’s exit likely reflects personal financial planning, not doubt in the company’s AI-driven language platform, which boasts 10.3M subscribers and 46.6M daily active users.
- Workday: At 19.5% insider ownership, leaders like CFO Rob Meese (122,405 shares post-April sale) and COO Aneel Bhusri are doubling down. Their stake in a company delivering $8.45B in cloud applications revenue underscores faith in AI-enhanced contract management and Incorta partnerships.
- Zscaler: The highest insider ownership at 19.6% signals conviction. Despite 2024 insider selling flagged in SEC filings, executives like CEO Jay Chaudhry retain $37.36B in market cap exposure, leveraging cybersecurity demand and T-Mobile collaborations to drive $2.42B in cloud security revenue.

ROE: The Efficiency Metric That Spells Outperformance

ROE measures how effectively a company turns equity into profit. A 21–27% ROE forecast for these firms by 2028 isn’t just impressive—it’s a sustainability promise.
- Duolingo’s AI Play: Its 49% YTD stock surge to $486 reflects investor buy-in for AI-powered language courses and chess instruction expansions. A visual2023-2025 stock price climb highlights this momentum:

- Workday’s Cloud Dominance: With ROE hitting 21%, its $8.45B revenue engine is turbocharged by AI-driven contract automation and enterprise partnerships.
- Zscaler’s Cybersecurity Surge: A 27% ROE target aligns with its 16.6% annual revenue growth, fueled by remote work security needs and T-Mobile’s 250,000-node network integration.

Growth Catalysts: Why These Stocks Are Undervalued Now

While headlines focus on macroeconomic headwinds, these firms are redefining industries:
1. Duolingo’s AI Expansion: Its 148 new language courses and 45% subscription revenue growth signal scalability beyond education.
2. Workday’s AI-Driven Efficiency: Collaborations with Incorta and Prudential Financial are lowering client costs while boosting margins.
3. Zscaler’s Cybersecurity Moat: With 95% of Fortune 500 companies using its cloud security, demand is inelastic—even as competitors falter.

Why Act Now? The Risk of Missing the Rally

Critics cite near-term volatility, but valuation metrics tell a different story:
- Duolingo: Trading at 22x forward earnings vs. a 30x five-year average. Its 49% YTD rise hasn’t yet priced in AI’s full potential.
- Workday: At 35x forward P/E, it’s cheaper than peers like SAP (42x) while growing faster.
- Zscaler: A 30x P/E ratio versus a 40x historical high, despite 27% ROE prospects.

The S&P 500, meanwhile, faces earnings headwinds, with 60% of companies missing Q1 estimates. By contrast, these three firms are recession-resistant, their growth tied to secular trends (AI, cloud, cybersecurity) that outlast market cycles.

Conclusion: Buy Where Leadership “Eats Their Own Cooking”

The data is clear: Duolingo, Workday, and Zscaler combine high insider ownership, best-in-class ROE, and game-changing growth. Their executives aren’t just shareholders—they’re stakeholders in a future where their companies dominate.

For investors, this is a no-brainer: Allocate now to firms where leadership’s wealth is tied to your returns. The next leg of this rally won’t wait for the cautious. Act decisively—these are the stocks that will define 2025’s winners.

This article is for informational purposes only. Always conduct your own research or consult a financial advisor before making investment decisions.

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