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☕ The only pureplay cybersecurity company to reach this milestone

Nov 27, 2024

Good morning! 👋

The Thanksgiving holiday is upon us here in the US so we’re going to keep things short and sweet.

I began yesterday’s 5 with Fitz very succinctly noting…

… “CrowdStrike might be a $1B+ quarter.”

Analysts expected $983M.

What happened?

CrowdStrike turned in $1.01B last night, a 29% YoY jump… then, raised guidance. (Read)

At the same time, ARR surpassed $4B in the quarter - the fastest and only pure play cybersecurity software company to reach this reported milestone.

Cash flow from operations was $326M while free cash flow hit $231M.

And finally, gross retention was over 97%.

People ask me about “hot” stocks constantly when it comes to stuff like this but that’s the wrong question.

What you want to ask yourself is which companies will be there when you need ‘em and invest accordingly.

CrowdStrike is a great example.

People fell all over themselves to sell this summer when the company prematurely released an update and caused a global kerfuffle. I told you point blank that it would likely be an amazing opportunity to snap up shares at a discount.

To be clear, I am not any smarter than the next person and I make plenty of mistakes, so I am NOT telling you this to brag. That’s not my style.

I want to make a point.

World class companies get beaten down more often than you’d think for reasons that have nothing to do whatsoever with the business case for owning ‘em.

So, not surprisingly, it stands to reason that you’ve often got one heckuvan opportunity when you can identify one of ‘em.

This isn’t rocket science.

Step #1: Start with the big picture.

Cybercrime may be a $24T problem by 2027 … trillion with a “T” … which makes it singlehandedly one of the largest single investing opportunities on the planet.
The average cost of fixing even a single attack is well into the millions.
Nearly 90 of S&P 500 companies consider cyber-defense a “must have” spend
95% of all cybercrime and data breaches are due to human error
75% of intrusions come from the cloud
75% of attacks are malware free
Just 5% of all companies' folders are effectively protected

Step #2: Then find THE player at the very top of the food chain.

And for the love of Pete, find somebody who knows what they're doing if you need some help finding stocks that fit the bill. If that’s me and you find the 5 with Fitz or One Bar Ahead® helpful, awesome. If it’s not, totally cool and you’re already getting the results you want, no offense taken whatsoever.

Mentors can share their knowledge, experience and insight which can help you a) avoid stupid mistakes (like selling CrowdStrike in the heat of the moment when your emotions are getting the better of you) and make better decisions (like buying more when it makes sense).

AI is very similar.

People are tempted to dismiss it as “a technology” when, in fact, AI may be the single largest investment opportunity in recorded history. A point I made again on the Claman Countdown yesterday when asked about it. (Watch)

Where do the markets go from here?

The path of least resistance is still higher, especially for stocks like CrowdStrike which is now up +58% from summer lows.

The VIX, a key measure of volatility, closed at 14.10 yesterday and may settle in the 13s this afternoon in a classic pre-holiday “volatility crush.” That’s typically a tailwind for stocks because it forces dealers to buy back hedges and to start thinking about the upside.

Keith’s Investing Tip: It’s not enough to buy stocks these days. People who understand market mechanics – like the VIX - have a huge advantage. 😀 (Watch)