For the past few months, the U.S. equity market has been rattled with a range of worries, including rising inflation and subsequent interest rate hikes, a banking crisis, geopolitical tensions, supply chain disruptions, and labor shortages. Hence, it's not surprising that many investors may prefer to avoid putting money in the stock market, instead parking it as cash.
However, that may not be a smart move, especially in the current inflationary environment. Instead, picking up shares in high-quality businesses with robust long-term potential can help investors reap benefits as macroeconomic conditions improve.
Against this backdrop, let's see why CrowdStrike (CRWD -0.68%), Airbnb (ABNB 1.17%), and UiPath (PATH 0.77%) could be surefire picks for April 2023.
1. CrowdStrike
Leading cybersecurity company CrowdStrike is the first stock to consider for April 2023. In its global threat report, CrowdStrike pointed out a 50% year-over-year jump in interactive intrusion campaigns, and a 95% year-over-year rise in cloud exploitation cases in the calendar year 2022.
Considering the rapid pace of digital transformation across the world, the elevated threat landscape, and the mission-critical nature of cybersecurity services, corporate spending in this area has proven quite resistant in the recessionary environment.
As a dominant player in the global endpoint security market with a 17.7% share, CrowdStrike is well-positioned to benefit from these trends. Similar to many other IT companies, CrowdStrike is also exposed to the risk of a delayed sales cycle. Yet, thanks to the superior ability of its artificial intelligence-driven cloud-native Falcon platform to identify and prevent cyber threats, CrowdStrike managed to maintain a customer retention rate of 98%. It reported a dollar-based net retention rate of over 120% in fiscal 2023 (ending Jan. 31, 2023), highlighting the success of its land-and-expand strategy.
CrowdStrike also saw a 41% year-over-year rise in its subscription customer base to 23,019 in fiscal 2023. Currently, 62% of these customers are using five or more of Falcon's security modules. This has made the platform highly entrenched in customers' business operations, resulting in higher switching costs and subsequently a sticky customer base.
With CrowdStrike firing on all cylinders, buying this cybersecurity stock seems to be a smart move even in the current precarious macroeconomic environment.
2. Airbnb
The second surefire pick for April 2023 is short-term vacation rental and experiences platform Airbnb -- a company that already enjoys an enviable brand position in the global travel industry. The global vacation rentals market is estimated to grow from $92.5 billion in 2021 to $317.8 billion in 2023. With Airbnb accounting for 20% of the global vacation rental market, it's well poised to benefit from this trend in the long run.
Airlines for America expects more than 158 million passengers in the U.S. to travel during spring break in 2023. Airbnb may emerge as a preferred accommodation choice for many of these travelers, as it offers quality accommodations across price ranges and geographies.
Airbnb continues to benefit from the flywheel effect, since more guests (people seeking out rental properties) will attract more hosts (people renting properties) and listings on the company's platform, and vice versa. The company also benefits from the network effect as more satisfied hosts help further expand the host network. The introduction of insurance coverage for hosts and guests, AirCover, helped boost trust among hosts and guests.
Besides short-term rentals, Airbnb is also exploring opportunities in long-term stays for remote working, subletting apartments, and a range of unique experiences for guests.
Despite the macroeconomic challenges, Airbnb grew its revenue by 40% year over year to $8.4 billion in fiscal 2022. It's also profitable and free cash flow positive. Considering its robust business model and stellar financial performance, Airbnb may prove to be an impressive pick in the coming years.
3. UiPath
The third surefire pick for April 2023 is leading robotic process automation (RPA) player UiPath. UiPath saw a 19% year-over-year jump in revenue to about $1.1 billion, while adjusted net income was up 78% year over year to around $80 million in fiscal 2023 (ending Jan. 31, 2023).
In periods of heightened macroeconomic uncertainty, companies focus more on cost optimization and less on top-line expansion. UiPath's low-code RPA software can be integrated into clients' existing infrastructure to automate several repetitive tasks. This helps clients save on time and costs.
UiPath was exposed to headwinds such as recessionary pressures, foreign currency fluctuations, and Russia sanctions in fiscal 2022. Despite this, its annualized renewal run-rate (annualized invoiced amounts for the contracted subscription and maintenance obligations) was up by 30% year over year to $1.2 billion at the end of the fourth quarter. This number gives the company high revenue visibility.
UiPath added 150 new customers in Q4 and ended the fiscal year with 10,800 customers. Its dollar-based net retention rate of 129% also highlights the success of its land-and-expand strategy.
UiPath has a pristine balance sheet with $1.8 billion in cash and no debt. With the company focusing on profitability and gradually improving its margins, the stock seems to be a worthwhile buy in April 2023.
