Chronicle Journal: Finance

CrowdStrike Holdings (CRWD) Vs Cloudflare (NET): Which Is A Better Cybersecurity Stock To Buy?

Looking To Add Top Cybersecurity Stocks To Your Portfolio? Let’s Dive Into These Two.

With pressures created by the coronavirus pandemic prompting organizations to operate remotely, cybersecurity stocks have been enjoying huge success. As more valuable information is being transmitted online, organizations have been prone to cyber attacks from bad actors as businesses are increasingly conducted over the internet. These range from destruction of data and theft of intellectual property to embezzlement and even reputational harm to the company. Considering that the stakes are higher than ever in this space, companies are more than happy to shell out funds to stay protected.

Even though there may be some form of pull-backs among the top cybersecurity stocks in the stock market today. We can’t deny the fact that demand for digital protections is more important than ever. As a result, we will see long-term growth as cyber-attacks increase in number and potential impact.  

In a world with growing cyber threats, even government agencies are not immune to these kinds of attacks. It makes perfect sense for investors to look for the best cybersecurity stocks to buy. Amongst the popular names out there, CrowdStrike Holdings (NASDAQ: CRWD) and Cloudflare (NYSE: NET) are hot names to consider as more organizations make cybersecurity a priority. But the real question here is, which is the better buy right now?

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CrowdStrike Holdings (CRWD)

For investors looking to invest in the cybersecurity space, most would consider leading cybersecurity firm CrowdStrike Holdings. For those unfamiliar, the company provides endpoint security, threat intelligence, and cyber-attack response services. Simply put, the company protects businesses and enterprises from data theft and cyberattacks. Given its prominent role in the developing U.S. government hack investigation, CrowdStrike remains in the spotlight.

cybersecurity stocks (CRWD stock)

While the cybersecurity market remains highly fragmented, this hasn’t stopped CrowdStrike from growing its business rapidly. The company provides market-leading solutions in the cybersecurity industry. It saw its share price tripled in the past year.

That said, CRWD stock may have posted strong gains last year, but that doesn’t mean it will stop gaining strong traction this year. With coronavirus still posing a challenge in many parts of the world, it’s safe to say that the ‘new normal’ will be with us for some time. After all, vaccinating large populations takes time.

CRWD Stock Jumps After Quarterly Report Top Estimates

From the quarterly report, revenue came in 74% higher to $264.9 million. That was well ahead of both the company’s guidance range of $245.5 million to $250.5 million and Street consensus of $250.4 million. Net new customer growth also accelerated. The company saw 1,480 net new subscription customers in the past quarter.

CrowdStrike (CRWD stock)Source: TD Ameritrade TOS

No doubt, CrowdStrike has been among the key beneficiaries of the stay-at-home phenomenon. Some of the success came from its strategic acquisitions. Be it the acquisition of Preempt Security or Humio, these two companies are expected to add value to the firm. And most importantly, CrowdStrike remains in growth mode. The company is also expected to benefit from the Internet of Things (IoT) trend and the associated explosion in networked devices that will occur over the next decade. For this reason, the company is in a good position for long-term expansion and eventual shift into substantial profitability.

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Cloudflare (NET)

Cloudflare may not be as exciting as CrowdStrike, but it could prove to be more rewarding in the long run. For those unfamiliar with the business, Cloudflare’s aim is to build a better and safer internet.

tech stocks (NET stock)

With more businesses moving their operations to the cloud, Cloudflare could see explosive growth in this burgeoning cybersecurity industry. That’s because of its role in safeguarding and speeding up the internet.

Cloudflare stock has skyrocketed 360% in 2020 amid signs that the business’s competitive position is strengthening. While other traditional businesses have been scaling down their businesses, Cloudflare has continued to roll out new services and enjoyed surging demand for its web security, content delivery, and enterprise network offerings.

NET Stock Continues To Win Big Clients

From its most recent earnings report, CEO Matthew Price highlighted five $1 million customer wins in the quarter. These deals totaled a strong $15 million and ranged from a $1 million three-year deal to an $8.5 million four-year deal. But these deals are just the tip of the iceberg, really. Despite experiencing some form of a pull-back in recent weeks, it seems to me that buying at dips may prove to be rewarding with NET stock. Now that NET stock has generally shown upward momentum, investors are also keeping an eye out for NET stock.

cloudflare (NET) stockSource: TD Ameritrade TOS

The company is growing its footprint with large customers in the $100K, $500K, and $1M brackets. And these customer segments are growing faster than the overall customer count. They are contributing significantly to the top line. These wins are because of the company’s sticky ecosystem and its effective land-and-expand growth model. These enterprise customers are contributing a growing share of Cloudflare’s revenue. They represented 21% of the revenue in 2017, and that figure had more than doubled to 46% in 2020. Having steady recurring cash flows from these subscriptions will be crucial for the company’s ongoing innovation and expansion initiatives.

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Bottom Line: CRWD Stock Or NET Stock?

By and large, cybersecurity stocks may not be as exciting as the latest products Apple or Tesla is hawking. But cybersecurity sure has a critical role to play now and in the future. With hacking incidents continuing to make the news, the need for cybersecurity solutions will be more pronounced than ever. 

Investors like CRWD stock because it is a solid play on a company that is working to keep our online activities safe and secure. Besides the growth that it is seeing, the company has no long-term debt. It is not surprising that many investors in enterprise stocks are big fans of CrowdStrike.

On the flip side, if you are bullish on the market for cloud computing, then NET stock may be for you. Not only does it provide a safer internet for consumers, but it also helps speed up the internet while shielding consumers from attacks. As the market for cloud computing continues to grow massively, NET stock is one of the top cybersecurity stocks to have on your list. 

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