CrowdStrike Holdings (CRWD)

It reports next week, and is a big holding of his. The market likes the cybersecurity space, so this is set up nicely.

Hit a 52-week high yesterday, but he sees further upside in the cybersecurity stocks.

He spoke to the CEO who said the company has gone cash-flow positive. He expects their next quarter to be a hit.

Last week, they beat top and bottom lines, and raised guidance full-year. Shares jumped 11% since then.

Numbers/outlook were good. CRWD reported EPS of 74c vs estimates of 56c. Sales were $731M vs estimates $724M. Sales rose 6% but recurring revenue rose sharply, it won a very large single order, and profitability is improving fast. Guidance was increased, though not by a huge amount. The backlog is growing, it has $2.4B net cash, and we would consider these very solid results overall.
Unlock Premium - Try 5i Free

Computer network attacks and Palo Alto's performance make this a long-term hold. The options market is pricing 7.9% up, slightly volatile. Guidance was conservative last quarter which will help jump over a low bar. Revenue year-over-year in the mid-30s is very attractive.

After Palo Alto's recent report, he expects a good quarter from Crowdstrike next week. Options price in an 8% move, and he expects an above-average move in line with fellow cybersecurity names.

The Falcon is their flagship and they were talking about AI long before it caught on. The more clients join their cybersecurity network, the stronger that network gets, based on the way it's designed. Fundamentals are great and he sees more growth.

He targets $170.50. This and Sentinel are the leaders in this sector. CRWD has the infrastructure to scale up. Are second only to Microsoft to execute. Own it here and add at $142 then $135 on pullbacks.

He bought this in early March at $126 and sold it today at $147. It's the least profitable cybersecurity stock and he's a little troubled by the rising move in interest rates, not peaking as he expected. So stocks like Crowdstrike will be challenged. This is a valuation trade, and he will buy Palo Alto and/or Fortinet at a lower price (they have lower valuations). Ring the register and take profits. Fortinet generates strong free cash flow, and also scores well in ROE and debt-to-equity. Maybe not a super balance sheet, but they have the flexibility to do the things they want, because they have profits today. So, they're less reliant on funding from the debt markets and less effected by rising rates.

They continue to execute. They were doing AI before it was cool. Enterprise spend is not as easy as in past years, but deals will still close just later.

A disappointment, underperforming Fortinet and Palo Alto. This hasn't captured more market share, though it saw a technical breakout a few weeks ago.

Reported a good beat and raised forecast, but shares still fell. A mystery to him. Doesn't see it declining more.

It provides cloud delivered solutions and cloud workload protection which is becoming very important and a very good niche to be in. It was reluctant to provide guidance in the last report. It is capital intensive and spends heavily on sales and marketing.

Don't add if you already own. Tenable Holdings was down 10% yesterday, which signals sector headwinds ahead.