Even though many investors are worried about a recession slowly approaching, some companies are still doing quite well for themselves. CrowdStrike (CRWD 0.13%) and Airbnb (ABNB 0.10%) are still displaying strong growth and look like fantastic buys right now.
Read on to find out why these companies are growing quickly and why it's a great time to establish a position in these two.
CrowdStrike
CrowdStrike is a leader in endpoint cybersecurity, which protects devices that access a client's network, like a laptop or phone. While it has been recognized as a leader in this field by Gartner and other third-party rankings, this is just the base offering in its product suite.
Among its other products are threat intelligence, identity protection, and cloud security. CrowdStrike's customer base is rapidly adopting these products, too, as the majority of customers utilize at least five offerings.
| Number of Modules Customers Are Using | Percent of Customer Base | YOY Growth |
|---|---|---|
| 5 or more | 62% | 52% |
| 6 or more | 39% | 62% |
| 7 or more | 22% | 75% |
Data source: CrowdStrike. YOY = year over year.
So what's CrowdStrike's secret to success? Its artificial intelligence (AI)-powered offering.
CrowdStrike doesn't just use AI as a buzzword; it's an integral part of its solutions. By analyzing trillions of signals weekly, its AI model can detect threats and shut them down without human intervention.
This offering has worked out well for CrowdStrike. Its new customer base grew 41% year over year in fiscal year 2023 (ending Jan. 31), and existing customers spent $125 for every $100 they spent last year. This combination of signing new clients and getting existing ones to increase their usage is powerful and helped CrowdStrike grow its annual recurring revenue by 48%.
Although it's not profitable on a GAAP basis, it does produce substantial free cash flow (FCF), converting 33% of revenue into FCF during the fourth quarter. While the stock trades for a fairly expensive 41 times FCF, if you use forward sales projections and CrowdStrike's Q4 FCF margin, it trades at 28 times future FCF.
That's a cheap price for a rapidly growing company, which makes CrowdStrike a buy right now.
Airbnb
Even though many predicted that Airbnb's alternative stay model would struggle as people had less discretionary funds, that hasn't been the case. In Q4, revenue rose 24% to $1.9 billion, and management also reported a strong backlog for the first quarter, indicating more growth is ahead.
That flies in the face of what many investors feared, but that doesn't mean Airbnb is out of the woods yet. Obviously, a recession could strike and dampen Airbnb's business, but the fear of one hasn't done anything to quell Airbnb yet. Additionally, some regions (like Asia Pacific) haven't returned to 2019 levels, primarily due to travel restrictions in China. With the growth of new listings (up 16% in 2022) plus some coronavirus recovery left from certain business segments, there's still a lot of upside in Airbnb's business.
On the financial side, there's room for improvement because Airbnb saw its business hampered by COVID-19 at the start of 2022.
ABNB Profit Margin (Quarterly) data by YCharts
With Airbnb reaching a more steady-state business, it's revealing what many knew: The platform is a profit-generating machine.
With the company trading at 24 times FCF, Airbnb stock looks appealing, as Wall Street analysts expect revenue to grow by over 14% in 2023 and 2024. That level of growth combined with rising profitability makes Airbnb look like an outstanding buy now.
