Strike while it's HOT!

                   May 30th, 2023, written by Crazy Miser

Key points:

Analysis

A leader in global cybersecurity that offers endpoint, cloud workload, identity, and data protection provided through the cloud. CrowdStrike has grown their customer base to 41% year-over-year. Announced a strategic alliance with Dell Technologies to help organizations prevent, detect, and respond to cyber attacks. Additionally, CrowdStrike Falcon platform is currently available for purchase, and in the upcoming months, it will be possible to add it to the purchase of any commercial Dell PC through Dell's direct sales teams and any of its accredited partners. Their annual recurring revenue (ARR) hit a record high this past quarter of $222 million which indicates improved capital efficiency and fast growing product fit. Finally, management gave a bullish outlook for the year with an estimated revenue topping $3 billion which would be a 36% increase over last year.

Valuation

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CrowdStrike is undervalued compared to their historic trading valuations. High-growth technology companies typically trade at extreme valuations due to their hyper-expansion within their market share. We estimate CrowdStrike to trade at a valuation of 30x P/S which would leave it at the price of $290-310.

Technical Analysis

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Although it cannot ensure success, technical analysis can help us predict the direction the stock will take over the next few weeks or months. We believe the stock is over-bought and may be due for a pull back due to the RSI at 71 and open gap at $123-125. Gap fills are never guaranteed but if it does fill, this would be an ideal time to start or add to a position. However, the stock may have more room to run to roughly the $165-170 range before selling off to complete the measured move. Therefore, you should never try to catch the bottom and always to dollar-cost-average.