Most of us would love the chance to own the next big thing. And that opportunity is revealing itself to investors through CrowdStrike (NASDAQ:CRWD). Let’s take a look at what’s happening off and on the price chart of CRWD stock and figure out how to handle the current situation.
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Unbridled market optimism has been almost everywhere over the past couple months. That’s particularly true for the tech-heavy Nasdaq Composite. Led by legends Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN), the index has continued to push to new highs.
In fact, the index is up just over 18% on the year. It’s rallied as much as 60% since the novel coronavirus tanked the market in March. But don’t worry, you might not be too late to the party.
To be fair, some of the gains in the market’s trillion-dollar club are due to slim down. But remember this is still a market made up of stocks. And importantly, the opportunity for owning new teacher leadership is available right now in CRWD stock.
What Is CrowdStrike?
What is CrowdStrike? Yahoo Finance describes the company as an international cloud-delivered solutions platform for next-generation endpoint protection. More simply, CrowdStrike is about cloud-based cybersecurity. And if we’re to believe InvestorPlace analyst Matt McCall, CRWD is well-positioned to be another big-time winner.
So, why now? CrowdStrike’s angle on cybersecurity positions it advantageously over its tech competition. Moreover, CRWD stock is only in the first inning or two of a much bigger game.
As McCall tells it, cybersecurity is growing. And cloud-based protection — rather than on-premise applications — is booming. CrowdStrike has doubled its market share over the last two years has posted and enviable year-over-year sales growth of 85%.
And now the pandemic-driven movement toward remote work promises to make a good growth story an even stronger play.
CRWD Stock Weekly Chart
Source: Chart by TradingView
If you’re looking to buy CRWD stock and wanting comfort from a traditional metric like the price-sales ratio, think again. Shares appear to be sitting in the nosebleed section at a multiple of nearly 45. And profits? Yikes! But make no mistake, CrowdStrike is in very good company right now.
CrowdStrike’s rich-looking neighbors include Zoom Video Communications (NASDAQ:ZM) and Shopify (NYSE:SHOP). In the past, CrowdStrike’s pricey conspirators could have included the aforementioned Amazon or Netflix (NASDAQ:NFLX). And let’s just say value investors waiting for a quarterly report worthy of categorizing those stocks as value plays — or worse yet, as blue-chip stocks — have lost out big.
At its core CRWD stock is a growth and momentum play. Still, investors don’t need to pay up every which way in order to play the game properly. There is value which can sometimes be exploited on the price chart. And right now is one of those instances in CrowdStrike.
How to Trade CRWD Stock
Currently CRWD has pulled back into a test of a recent breakout from its lifetime cup-shaped base. The challenge should find natural buyers. And that should work to form a low in front of fresh highs in the coming weeks. But will it?
At the moment, I’d only recommend buying shares if momentum reasserts itself. To confirm this positive change stochastics will need to signal a bullish crossover. Right now the indicator is positioned bearishly. It could be a warning of deeper profit-taking or even a more prolonged correction.
Once today’s modest pullback or tomorrow’s deeper decline in CRWD stock finds secondary confirmation, I’d be a buyer. Still, there are no guarantees this strategy will succeed either. Even the greatest of stocks have struggled.
The good news is if investors want ironclad security from unwanted bearish threats, along with a good-looking price chart, I’d suggest a married put or collar strategy for that stock purchase.
Investment accounts under Christopher Tyler’s management do not currently own positions in securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.