Two Underappreciated Stocks to Consider and One to Avoid

Two unpopular stocks that deserve attention are Zscaler (ZS) and Lennox (LII). ZS offers software-as-a-service for secure cloud connections, with 19.9% projected revenue growth and a valuation ratio of 15.3x forward price-to-sales. LII is a climate control solutions company with an excellent operating margin of 16.1% and EPS growth of 24.3% annually. OneWater (ONEW) is a marine products company facing challenges with poor same-store sales, contracted EPS, and a 7x net-debt-to-EBITDA ratio.

Zscaler (ZS) and Lennox (LII) are two unpopular stocks that deserve attention in the current financial landscape. Zscaler, a leading cloud security company, offers software-as-a-service for secure cloud connections, with projected revenue growth of 19.9% and a valuation ratio of 15.3x forward price-to-sales [1]. Lennox, a climate control solutions company, boasts an excellent operating margin of 16.1% and EPS growth of 24.3% annually [2].

Zscaler's strong financial performance is evident from its latest earnings report. The company ended the third quarter of fiscal 2025 with $2.9 billion in annual recurring revenues (ARR), representing a 23% year-over-year growth. This growth was driven by the Z-Flex purchasing program, which simplifies procurement and allows customers to scale adoption of Zscaler’s platform. The company remains confident in achieving its $3 billion ARR target by the end of the fourth quarter of fiscal 2025 [1].

Lennox, on the other hand, has shown resilience in the face of market volatility. The company's excellent operating margin of 16.1% and EPS growth of 24.3% annually indicate strong financial health. Lennox's focus on climate control solutions positions it well in the growing market for sustainable and efficient energy solutions.

OneWater (ONEW), another marine products company, faces challenges with poor same-store sales, contracted EPS, and a high net-debt-to-EBITDA ratio of 7x. While OneWater has shown signs of improvement, it remains a high-risk proposition compared to Zscaler and Lennox.

Zscaler's stock has surged 66.3% year-to-date, outperforming the Zacks Security industry's growth of 22%. Lennox's stock has also shown resilience, with a consistent upward trend in recent months. Both companies are well-positioned to benefit from the growing demand for secure cloud connections and climate control solutions.

In conclusion, Zscaler and Lennox are two underrated stocks that deserve attention from investors and financial professionals. Their strong financial performance, growing market demand, and promising future prospects make them compelling investment opportunities.

References:
[1] https://www.nasdaq.com/articles/zscaler-nears-3b-arr-goal-can-it-maintain-momentum-through-fy25
[2] https://www.aipt.lt/zscaler-stock-forecast-2025-is-this-cybersecurity-giant-a-buy-or-bust/