As a swing trader, I often analyze companies to determine the best investment opportunities. Today, I will share my thoughts on two prominent cybersecurity stocks: CrowdStrike Holdings (CRWD) and SentinelOne (S).
CrowdStrike Holdings (CRWD)
CrowdStrike provides advanced endpoint protection through its cloud-based Falcon platform. This service is offered via a subscription model. Year-to-date, CrowdStrike’s shares have risen by 51%, and over the past year, they have increased by 154%.
The company recently announced its inclusion in the S&P 500, which has contributed to its stock’s upward movement. Despite its high valuation, CrowdStrike’s fundamentals remain strong. The company’s recent earnings report exceeded expectations, with adjusted earnings of 93 cents per share on $921 million in revenue. Their annual recurring revenue (ARR) reached $3.65 billion, a 33% year-over-year increase.
Given these factors, I recommend monitoring CrowdStrike for a potential price correction, which could provide a more favorable entry point for long-term investment.
SentinelOne (S)
SentinelOne offers an autonomous cybersecurity platform using artificial intelligence for detection and response. Unlike CrowdStrike, SentinelOne’s stock has dropped 36% year-to-date, though it is up 11% over the past year.
SentinelOne’s valuation is more in line with its industry peers, but the company remains unprofitable. Despite some positive earnings results, such as the first quarter of positive free cash flow, the company’s revenue growth has slowed. Its full-year revenue growth decreased from 106% in Fiscal 2023 to 47% in Fiscal 2024.
SentinelOne’s long-term potential is uncertain, and significant progress is needed before it becomes a viable investment.
Conclusion
CrowdStrike’s consistent profitability and growth make it a more attractive investment, despite its high valuation. I recommend watching for a price correction to find a better entry point. On the other hand, SentinelOne’s ongoing lack of profitability and slower growth present significant risks. While it may have potential, more evidence of sustained progress is required before it can be considered a solid investment.