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Buy CrowdStrike (CRWD) to Beat Current Market Uncertainties

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·5 min read
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CrowdStrike Holdings, Inc. CRWD is one such stock investors should consider adding to their portfolio amid the current macroeconomic and geopolitical uncertainties and gain from its upside potential.

The broader equity market has been highly volatile so far this year due to concerns over inflation, rising interest rates and increasing oil prices. The ongoing Russia-Ukraine war has further increased worries for investors about the global economic recovery. This sent major stock market indexes, the Dow Jones Industrial Average, Nasdaq Composite and S&P 500, down 13.6%, 27.5% and 18.2%, respectively, year to date (“YTD”).

However, this sell-off in the broader equity market has led to a massive correction in several technology companies’ stock prices, which are currently available at an attractive valuation.

In our opinion, CrowdStrike is one such company that has seen a massive correction YTD as well as in the past year.

CrowdStrike Price

CrowdStrike Price
CrowdStrike Price

CrowdStrike price | CrowdStrike Quote

Why Invest in CrowdStrike?

CrowdStrike stock has plunged 17.3% YTD and 27.5% in the past year. As a result, CRWD stock currently trades lower than its 52-week high, which reflects its potential to go upward. The stock’s closing price of $169.32 on Jun 10 is 43.3% lower than the 52-week high of $298.48 attained on Nov 10, 2021.

With this correction in the stock price, CrowdStrike currently trades at an attractive valuation multiple. The stock trades at a one-year forward price-to-sales multiple of 15.69X compared with its five-year average of 57.98X.

Additionally, amid the ongoing economic and financial instability, it is prudent to pick solid growth companies as these are financially stable, accruing profits in established markets. These stocks with their solid fundamentals allow investors to hedge their funds from any economic downturn.

Apart from having solid fundamentals, CrowdStrike has the favorable combination of a Growth Score of A and a Zacks Rank #2 (Buy).

Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or #2 and a Growth Score of A or B offer solid investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.

CrowdStrike has an impressive earnings surprise history. The company outpaced estimates in all the trailing four quarters, delivering an average earnings surprise of 44.3%. Additionally, CRWD stock has an impressive long-term earnings per share (EPS) growth expectation of 38.9%.

The Zacks Consensus Estimate of $1.24 per share for fiscal 2023 earnings suggests growth of approximately 85.1% from the year-ago period. For fiscal 2024, the consensus mark for earnings is pegged at $1.75, indicating a year-over-year increase of 41.4%.

Strong Fundamental Drivers

CrowdStrike is a global leader in next-generation endpoint protection, threat intelligence and cyberattack response services.

CrowdStrike is benefiting from the rising demand for cyber-security solutions due to the slew of data breaches and the increasing necessity for security and networking products amid the pandemic-led remote-working trend. Moreover, the ongoing conflict in Ukraine and sanctions imposed on Russia may result in an increase in cyberattacks as Kremlin might use it as a tool to put pressure on western countries to ease sanctions.

Additionally, the continued digital transformation and cloud migration strategies adopted by organizations are key growth drivers. CRWD’s portfolio strength, mainly the Falcon platform’s 10 cloud modules, boosts its competitive edge and helps add users. Moreover, strategic acquisitions like Humio and Preempt are expected to drive growth for the company.

Earlier this month, CrowdStrike delivered better-than-expected results for the first quarter of fiscal 2023. Quarterly revenues and non-GAAP earnings soared 61% and 210%, respectively, on a year-over-year basis. The company added 1,620 net new subscription customers during the reported quarter. It had a total of 17,945 subscription customers as of Apr 30, 2022, reflecting year-over-year growth of 57%.

Considering CrowdStrike’s growth prospects, it makes sense to invest for long-term gains.

Other Stocks to Consider

Some other top-ranked stocks from the broader technology sector are ON Semiconductor ON, Analog Devices ADI and MaxLinear MXL. While ON sports a Zacks Rank #1, Analog Devices and MaxLinear each carry a Zacks Rank #2.

The Zacks Consensus Estimate for ON's second-quarter 2022 earnings has been revised to $1.26 per share from $1.04 over the past 60 days. For 2022, earnings estimates have moved north by 18% to $4.91 per share in the past 60 days.

ON's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 2.8%. Shares of ON have plunged 11.4% YTD.

The Zacks Consensus Estimate for Analog Devices' third-quarter fiscal 2022 earnings has been revised upward by 24 cents to $2.42 per share over the past 30 days. For fiscal 2022, earnings estimates have moved north by 9.6% to $9.24 per share in the past 30 days.

Analog Devices' earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 7.7%. Shares of ADI have decreased 10.7% YTD.

The Zacks Consensus Estimate for MaxLinear's second-quarter 2022 earnings has been revised upward by 10 cents to $1.02 per share over the past 60 days. For 2022, the Zacks Consensus Estimate for MaxLinear's earnings has moved north by 36 cents to $4.07 per share in the past 60 days.

MaxLinear's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 9.6%. Shares of MXL have plunged 48.2% YTD.


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