High-growth stocks seem to be back in style with Wall Street after an abysmal 2022. CrowdStrike (CRWD 0.13%) and Procore (PCOR -1.81%) are two stocks that give investors an excellent chance to capitalize on this shift. As a bonus, neither stock is severely overvalued, so investors don't need to worry about getting burned as they did throughout 2022.
So let's find out why these two make such compelling investments.
CrowdStrike
CrowdStrike is a leader in endpoint cybersecurity software, which protects network access points like cellphones, laptops, or cloud workloads. With more than 21,000 customers as of November 2022, CrowdStrike has a large client base using its security powered by artificial intelligence (AI). It's also rapidly growing, with annual recurring revenue increasing 54% in third-quarter FY 2023 (ending October 31) to $2.34 billion.
So why is CrowdStrike such a great buy right now?
Cybersecurity Ventures projects cybercrime will cost the global economy $10.5 trillion by 2025, so top-notch protection will be vital. Additionally, businesses cannot pull back their spending on cybersecurity software during difficult economic periods. If they did, they would be exposed to attacks when they can least afford it.
This combination of a vital offering and best-in-class protection makes CrowdStrike a lucrative investment. With the stock trading at relative valuation lows, now looks like a great time to take a position in the stock.
CRWD Price to Free Cash Flow data by YCharts. PS Ratio = price-to-sales ratio.
CrowdStrike has an immense market opportunity expected to reach $158 billion by 2026. With the stock only up 12% this year, it has a lot of room to run, especially with Wall Street analysts projecting 33% revenue growth in its next fiscal year.
Procore
Bringing the construction industry into the digital age isn't an easy task, but that's precisely what Procore is doing with its construction management software. By linking project owners, contractors, and subcontractors on one platform, all parties can see the progress, budgets, and drawings. While these are great benefits, the main draw to using Procore is that it creates a single point of truth.
Fewer mistakes are made when everyone goes to one place for the latest drawings and communications. This also saves time and money, both critical in the construction industry, which has razor-thin margins.
Procore has delivered strong revenue growth as a public company, and Q4 was no different. Q4 revenue rose 38% over last year, with 2022 revenue rising 40%. Guidance for 2023 was also strong, with revenue expected to reach about $900 million, indicating 25% growth.
While Procore isn't profitable, it's taking steps to get closer. In Q4, operating expenses only rose 24%, much slower than its revenue growth rate. Procore has a long way to go before breaking even (it lost $71.2 million against $202 million in revenue in Q4), but this is still a positive sign.
Procore has delivered a strong performance in 2023, with the stock up 44%. But its valuation is still at a reasonable level.
PCOR PS Ratio data by YCharts. PS Ratio = price-to-sales ratio.
Procore is much earlier in its company lifecycle than CrowdStrike, meaning it has an even greater upside. With business remaining strong, expenses trending in the right direction, and a massive opportunity in construction, Procore will likely remain a strong growth stock for years to come.
