There’s no question cybersecurity remains in a long-term growth phase, with the mobile and work-from-home reality, as well as AI (which will be used by defenders and hackers to advance their efforts), increasing the need for it, asserts Mike Cintolo, growth stock expert and editor of Cabot Top Ten Trader.

CrowdStrike (CRWD) has been one of the leaders in the space for a long time, with a platform that started with endpoint security years ago (protecting an employee’s cell phone, tablet or laptop — and then integrating the trillions of data points per week into the platform, becoming “smarter” over time).

The company has branched out into many new categories in recent years — such as extended detection and response, log protection, automated malware search and analysis, identity protection, IT and file security, observability and more.

A bunch of these markets are growing like mad (log users up three-fold year-on-year; identity protection revenue growing at more than 100%); all in all, the cloud-native platform stops breaches, saves time and allows big firms to get an all-in-one solution instead of buying sometimes dozens of different patches. And, business-wise, not only is CrowdStrike still growing rapidly at scale, but it’s doing so in an increasingly profitable way.

In Q2, revenues and annualized recurring revenue (ARR) lifted 37%, but earnings more than doubled and free cash flow for the first half of the year came in north of $1.70 per share, and management said it’ll reach its target model for operating and free cash flow margins (north of 30% of revenue!) by year end. (Free cash flow is expected to rise to nearly $3.75 per share this fiscal year.)

Growth is slowing a bit due to the firm’s size (nearly $3 billion in ARR), but analysts see revenues up 28% next year, so it’s certainly not slowing down much from here. It’s a great story that should continue to play out for years to come.

Technically, CRWD topped near $300 in 2021, fell to $92 by January of this year and then rebounded decently into the $160 area in May. It stalled out at that point, but it never really got hit — shares essentially moved sideways between $140 and $165. The recent earnings move took CRWD back to the top of its structure; we think you can start a position around here and look to add should the stock (and market) perk up.

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