1 discounted US stock for me to buy for the cybersecurity revolution!

This AI-powered cybersecurity company’s beating its rival technologies, and a recent share price drop may have just created a buying opportunity.

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The hunt for the best stocks to buy now never ends. There are always new opportunities to explore and lucrative deals to be made. The challenge is finding which companies will go on to deliver market-beating returns. And in my experience, it’s often an unpopular business in a critical industry.

The market for cybersecurity has exploded in recent years. As threats become more intricate and data more valuable, companies have begun heavily protecting their IT infrastructure. And according to Polaris Market Research, the global cybersecurity market’s on track to double to over half a trillion dollars by 2030.

That’s what’s brought CrowdStrike (NASDAQ:CRWD) to my attention. The IT outage triggered by a botched software update earlier this year put CrowdStrike on many investors’ blacklists. However, in my opinion, the subsequent sell-off may have created a discounted buying opportunity for long-term investors. Let’s take a closer look.

An AI-powered cyber solution

In the world of corporate cybersecurity, CrowdStrike’s currently a global leader. Its technology’s exceptionally expensive and yet companies around the world are more than happy to pay up. This is in part because the subscription costs of the Falcon platform are far lower than that of a security breach. But mostly it’s because Falcon keeps outperforming rival solutions.

The technology uses artificial intelligence (AI) to detect and defend against cyber attacks at impressive efficiency. And the platform’s capabilities are continuously demonstrated at global cyber competitions. In fact, at the latest SC Awards Europe – the longest-running annual cybersecurity event – CrowdStrike won:

  • Best Cloud Security Solution
  • Best Endpoint Solution
  • Best AI Solution
  • Best Threat Intelligence Technology
  • Best Incident Response Solution categories

This isn’t the first time CrowdStrike has demonstrated the effectiveness of its technology. And while the recent IT outage event did start to raise eyebrows, the fault was ultimately unrelated to its cyber defence capabilities. Subsequently, there seems to have been little customer attrition, with the exception of Delta Airlines, which decided to lawyer up.

Performance-dependent valuation

In the wake of the IT outage, CrowdStrike shares were slashed in half. And such volatility is to be expected, given the stock was trading at a pretty lofty valuation. Today, the US stock’s recovered slightly but still trades around 25% lower. Yet even at this price point, the stock doesn’t look cheap in the traditional sense, with a forward price-to-earnings ratio of 72.5!

Needless to say, that doesn’t exactly scream bargain. But with a bit of context, the valuation starts to make more sense. Management’s outlined its long-term target of raising its operating profit margin to range 28-32%, with free cash flow margins following at 34-38%.

Considering the firm’s only just started to enter the black, that suggests tremendous earnings growth could be on the horizon. Even more so if the expansion forecasts surrounding the cybersecurity industry prove to be accurate.

Of course, success is by no means guaranteed. And even if CrowdStrike’s technology currently holds the crown, a rival solution with cheaper pricing could come along and shake things up.

It goes without saying that investing in CrowdStrike today comes paired with a lot of risk. But in my opinion, the growth trajectory of this business makes it a risk worth taking. That’s why I’m planning on opening a small position this month.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended CrowdStrike. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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