After a huge run-up for many growth stocks this year, investors in these highfliers were tested earlier this month. Many growth stocks fell sharply as investors took profits during earnings season. The pullback in their stock prices, of course, wasn't surprising. Many growth stocks' valuations were becoming questionable. Indeed, even after their declines, some fast-growing companies' stocks still look priced for perfection.

But for the discerning investor who wants to find a good growth stock to buy today, there are still some options out there if you look close enough -- even in this market. One top-notch company worth considering investing in now is CrowdStrike (CRWD -12.12%), a cloud-native business setting a new standard in cybersecurity.

A bar chart with a trend line highlighting a growth trend

Image source: Getty Images.

Why CrowdStrike?

Led by CEO George Kurtz, who founded the company in 2011 and has a 10% stake in the company today, CrowdStrike has a major advantage in the cybersecurity space: It has a solution that was built from the ground up for a cloud era. And customers are turning to CrowdStrike in droves, capturing the strong appeal of the company's cybersecurity platform.

CrowdStrike's platform, Falcon, employs a single lightweight agent across its customer base to scour and collect data in real time. This crowdsourced data is sent to the company's dynamic graph database, called Threat Graph, where it's processed and analyzed. This approach to cybersecurity makes the Falcon platform a scalable security product that becomes more effective with every new customer, creating a powerful network effect. Even more, the company leverages its crowdsourced data with AI algorithms that are always improving, maximizing the Falcon platform's impact across its customer base.

CrowdStrike's revenue is soaring, driven by both new customer growth and expansion from existing customers. In the company's most recently reported quarter, which was its first quarter of fiscal 2021, revenue increased 85% year over year to $178.1 million. The company added 830 new subscription customers during the period, bringing total customers to 6,221. Compared to the year-ago period, subscription customers have more than doubled. Furthermore, management said that the number of customers that had adopted four or more of its cloud-based security modules grew 55% year over year in fiscal Q1. Customers using five or more modules rose 35% year over year.

A premium valuation worth paying for

While all of this is great, some investors may hesitate about taking a closer look at this stock because of its valuation. The company has a $22 billion market capitalization despite generating just $563 million in trailing-12-month revenue, giving CrowdStrike a price-to-sales ratio of 39. Investors, therefore, have priced in rapid growth for years to come.

But investors should realize that CrowdStrike is not your average software-as-a-service company. Its scalable business model is translating to significant operating leverage (the sensitivity of a company's operating income to increases in revenue) and robust free cash flow.

CrowdStrike's gross profit margin on its subscription business was 77% in fiscal Q1, up from 72% in the year-ago period. Strong revenue growth and operating leverage have helped drive trailing-12-month free cash flow of $116 million. But even this understates the company's momentum in this key cash flow metric, which is defined as cash from operations less capital expenditures. In the most recent quarter, which marked CrowdStrike's highest-revenue quarter yet, free cash flow was $87 million, or 49% of revenue. This was up from free cash flow of negative $16 million in the year-ago quarter.

A timely opportunity

A lucrative business model, combined with CrowdStrike's rapidly growing top line, sets the stage for substantial profits over the next decade.

Making the opportunity particularly compelling is CrowdStrike's massive addressable market. Annual global cybersecurity spend today is around $173 billion, according to estimates by the Australian Cyber Security Growth Network. The market is estimated to grow to $270 billion by 2026.

But can CrowdStrike keep growing rapidly over the next 10 years? While investors should plan for an inevitable deceleration from today's uncanny growth rates, CrowdStrike's momentum with customers today and its large addressable market suggest that high growth rates are likely to persist throughout the 2020s. It wouldn't be surprising for CrowdStrike to average 25% annualized revenue growth during the next 10 years.

Of course, investors interested in buying shares today should do so expecting wild swings in the company's stock price. With so much of CrowdStrike's stock price today based on expectations for big growth in the years ahead, anything that sways sentiment regarding growth projections for the company could lead to significant volatility. But for investors willing to hold the stock for the long haul, CrowdStrike looks like a promising opportunity.