The market is full of growth stocks, but not all are created equal. Some are too expensive or unprofitable, while others may not grow fast enough to justify a premium price tag. Finding the "Goldilocks" growth stock is difficult, but a couple of excellent picks are out there.

If I had to pick one as my ultimate growth stock, I'd choose CrowdStrike (CRWD 0.69%). CrowdStrike is a rapidly growing, profitable cybersecurity provider that doesn't trade at a significant premium. This combination of factors makes it my top growth stock, but there's much more to the business than just a few metrics.

CrowdStrike has a first-mover advantage

CrowdStrike is a cloud-first cybersecurity application specializing in endpoint protection. While there are many endpoint protection providers in the market, what separates CrowdStrike from its competitors is the implementation of its threat graph. This technology utilizes a branch of artificial intelligence (AI) known as machine learning (ML) to constantly analyze activity to determine what is normal and what might be a threat.

After a threat is detected, CrowdStrike can shut down the breach before serious damage is done. Then, it uses information from attacks across its customer base to train the software to prevent that attack style, strengthening the protection level across the board.

While that offering kick-started CrowdStrike, the company has since added more than 20 products that expand upon the base functionality. This overarching offering is the Falcon Platform and includes products like identity threat protection, cloud security, and malware search. Customers are rapidly adopting these products, as 63% use at least five products and 24% use at least seven.

This has led to large expansion rates, which measure how much a customer spent this year versus last. In Q2 of FY 2024 (ending July 31), the average CrowdStrike customer spent $125 for every $100 they spent last year, showing significant expansion even after the initial sale. That expansion helped power annual recurring revenue growth 37% higher in Q2 to $2.93 billion.

But CrowdStrike isn't just a growth-at-all-costs company; it has also posted some profits recently.

CrowdStrike is just turning profitable

In the second quarter, CrowdStrike generated a positive net income for the second quarter in a row, delivering $8.4 million to shareholders. While that's not earth-shattering profitability, it demonstrates that CrowdStrike has the discipline to break even.

CRWD Profit Margin (Quarterly) Chart

CRWD Profit Margin (Quarterly) data by YCharts.

While CrowdStrike isn't posting huge profits, it generates a ton of free cash flow. Free cash flow (FCF) doesn't include non-cash items like stock-based compensation, which is a significant expense for CrowdStrike. Using this measure, CrowdStrike posted an impressive 26% FCF margin, which works out to around $190 million in Q2 FCF generation.

Strong FCF allows a company to self-fund itself and do other useful tasks, such as making acquisitions or repurchasing stock. With CrowdStrike starting to achieve full profitability while producing lots of FCF, it's a very financially stable company.

However, these companies often come with an ultra-premium price tag because they are some of the best companies in existence. While I wouldn't say CrowdStrike is cheap, it's far from expensive. At 15 times sales, it's at a lower level than many of CrowdStrike's young and growing software peers.

Even when assessed from an FCF standpoint, CrowdStrike trades at 48 times FCF. For reference, Microsoft (NASDAQ: MSFT) trades at 40 times FCF, and CrowdStrike is growing much faster (CrowdStrike grew revenue at 37% versus Microsoft's 8%).

CrowdStrike is a well-run company just starting to flip the profitability switch. Combined with the massive market opportunity in cybersecurity, it claims the title of my ultimate growth stock to own.