Why CrowdStrike Remains a Solid Long-Term Growth Stock

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Internet security was growing in importance even before the novel coronavirus. But make no mistake – as more people are working from home, companies have to be more cognizant of the risks their networks face every day. That’s where CrowdStrike (NASDAQ:CRWD) and CRWD stock come in.

Image of Crowdstrike (<a href=

Source: Piotr Swat /

CrowdStrike has been a big winner in the stock market since mid-March, which marked the low point for many equities as Covid-19 fears reached a fever pitch.

Since that day, CRWD stock is up more than 190%, and is up 102% so far on a year-to-date basis.

The Growing Focus on Cybersecurity

As if the Covid-19 pandemic wasn’t bad enough, there are some bad guys out there who are looking to make it even worse. Just ask Eric Cole, a former CIA analyst and professional hacker who spoke to Forbes:

Traditionally, you had your kids at school, your spouse at their job, and now all of a sudden, everyone’s converged. I have friends who are on an old home computer, their kids are doing homework, they’re running businesses, they’re filing taxes and that’s an exposure point. [Hackers] are sending out a 300% increase in phishing emails about COVID-19 because they know that people are so petrified. In our analysis over the last three weeks, 71% of all emails that you receive that say COVID-19 or corona are actually malware or attacks. Less than 30% are legitimate. So you need to be so careful.

On top of that, companies that are adapting to the work-from-home culture are putting their servers online, since that’s the most efficient way for employees to keep working. And as Cole describes it, that opens all-new avenues for hackers to try to get corporate data.

A report shows that 70% of organizations recognize the value of increasing their investment in cybersecurity. “It is more likely that businesses will be exposed because they neither have in-house, nor external access to the necessary skills to deliver their business operations with a remote workforce,” Steve Durban, managing director of the Information Security Forum, told Security Magazine.

Those fears – and the growing realization that remote work will likely be the way of the future for many companies – help push CrowdStrike higher.

In fact, end-to-end protection is one of CrowdStrike’s specialties and is one reason why the company is in such demand now. One such system, called Falcon Prevent, was launched in the first quarter to give company administrators additional tools to install security on teleworkers’ home computers.

CWRD Stock at Glance

In early June, CrowdStrike reported first-quarter earnings that gave the stock another boost higher. The company said revenue of $178.1 million was up 85% on a year-over-year basis. The number also beat analysts’ expectations of $165.4 million.

Earnings per share was also a beat, coming in at 2 cents per share, which was a huge improvement from the 47 cent per share loss the company posted a year ago. Analysts had forecast a loss of 6 cents per share.

CrowdStrike issued guidance for the second quarter, saying it projects revenue of $188 million versus analysts’ projections of $173 million. The company forecast a quarterly EPS loss of 1 cent, versus a loss of 6 cents per share suggested by analysts.

CrowdStrike says it entered the second quarter with cash and cash equivalents of more than $1 billion as it looks to scale its business.

The Bottom Line on CRWD Stock

There’s no doubt that CrowdStrike is an expensive stock, with a price-sales ratio of 39 right now. But that’s to be expected for a company with a rapid growth curve that is trading short-term profitability for scale and expansion.

CRWD stock’s growth curve will be steep as long as the Covid-19 pandemic forces companies to support teleworking.

But even after there’s a vaccine, I wouldn’t abandon CrowdStrike. Cybersecurity will remain one of the most important considerations for companies in the next decade.

As long as there are cyber-criminals trying to hack corporate systems, companies like CrowdStrike will thrive.

Patrick Sanders is a freelance writer and editor in Maryland, and from 2015 to 2019 was head of the investment advice section at U.S. News & World Report. Follow him on Twitter at @1patricksanders. As of this writing, he did not hold a position in any of the aforementioned securities.

The post Why CrowdStrike Remains a Solid Long-Term Growth Stock appeared first on InvestorPlace.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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