High-growth stocks appear to be back in fashion after a miserable 2022 on Wall Street. CrowdStrike (CRWD -0.14%) and Procore (PCOR -1.46%) are two stocks that offer investors a great opportunity to capitalize on this shift. As a bonus, neither stock is grossly overvalued, so investors don’t have to worry about burning themselves like they did throughout 2022.
So let’s find out why these two make such compelling investments.
CrowdStrike
CrowdStrike is a leading provider of endpoint cybersecurity software that protects network access points such as mobile phones, laptops or cloud workloads. With more than 21,000 customers as of November 2022, CrowdStrike has a large customer base leveraging its artificial intelligence (AI) based security. It’s also growing fast, with annual recurring revenue rising 54% to $2.34 billion in the third quarter of fiscal 2023 (ending Oct. 31).
So why is CrowdStrike such a good buy right now?
Cybersecurity Ventures Projects Cybercrime will cost the global economy $10.5 trillion by 2025, so world-class protection is critical. Additionally, companies cannot scale back their cybersecurity software spending during tough economic times. Otherwise, they would be vulnerable to attacks when they can least afford it.
This combination of an important offering and world-class protection makes CrowdStrike a lucrative investment. With the stock trading at relatively low valuation lows, now looks like a good time to take a position in the stock.
CRWD price to free cash flow data from YCharts. PS Ratio = Price to Sales Ratio.
CrowdStrike has an immense market opportunity projected to reach $158 billion by 2026. With the stock up just 12% this year, it has plenty of room to run, especially with Wall Street analysts forecasting revenue growth of 33% for the next fiscal year.
Procore
Bringing the construction industry into the digital age is no easy task, but Procore is doing just that with its construction management software. By connecting project owners, contractors and subcontractors on one platform, all parties can see progress, budgets and drawings. While these are great benefits, the primary benefit of using Procore is that it creates a single point of truth.
Fewer mistakes are made when everyone goes to one place for the latest drawings and communications. It also saves time and money, both crucial in the construction industry, which has razor-thin margins.
Procore has delivered strong revenue growth as a public company, and the fourth quarter was no different. Fourth-quarter revenue rose 38% year over year, with 2022 revenue up 40%. Guidance for 2023 was also strong, with revenue expected to hit about $900 million, indicating 25% growth.
Though Procore isn’t profitable, it’s taking steps to get closer. In the fourth quarter, operating expenses rose just 24%, much slower than the revenue growth rate. Procore still has a long way to go before it breaks even (it lost $71.2 million from $202 million in fourth-quarter revenue), but that’s still a positive sign.
Procore has delivered a strong performance in 2023, with the stock climbing 44%. However, the rating is still at a reasonable level.
PCOR-PS ratio data from YCharts. PS Ratio = Price to Sales Ratio.
Procore is much earlier in its enterprise lifecycle than CrowdStrike, which means it has an even bigger advantage. As the business remains strong, spending is trending in the right direction, and there is a tremendous opportunity in construction, Procore is likely to remain a strong growth stock for years to come.
Keithen Drury has positions at CrowdStrike and Procore Technologies. The Motley Fool has positions in and recommends CrowdStrike and Procore Technologies. The Motley Fool has a disclosure policy.
