Investing in stocks that show favorable characteristics is pivotal in fortifying an investment portfolio. With the right stock selection, investors can cultivate a portfolio that continues to gain traction year after year, laying the groundwork for empowered wealth and secure retirement planning. The key lies in obtaining and retaining these stocks as they unveil substantial growth, thereby catalyzing the surge in share prices over time.
Empower your investment strategy with three promising stocks that are positioned to make waves this year, thanks to their compelling financial performance, business advancements, and growth potential.
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The Cybersecurity Trailblazer: CrowdStrike
CrowdStrike (NASDAQ: CRWD) represents a cybersecurity firm that leverages an artificial intelligence (AI)-driven platform to identify cyber threats and bolster clients’ online security. Given the pervasive influence of digital transformation across organizations, the demand for cybersecurity and threat protection brings a robust tailwind. CrowdStrike’s financial results for the initial nine months of fiscal 2024 ended October 31 underscore the company’s rapid progress. Total revenue surged by 37.8% from the previous year to reach $2.2 billion, with subscription revenue comprising 94% of the total. Gross profit also recorded a 41.1% increase, amounting to $1.7 billion, while the gross margin improved from 73.5% to 75.2% year-over-year. Notably, the company generated a positive free cash flow of $656.6 million for the first nine months, marking a 40% increase over the prior year’s $467.4 million.
Furthermore, subscription annual recurring revenue has exhibited steady growth, reaching a new pinnacle of $3.2 billion in the third quarter of fiscal 2024, a 35% year-over-year increase. This phenomenal achievement, surpassing the recurring revenue from four years prior by more than sixfold, signifies CrowdStrike’s rapid expansion in both bookings and customer base. With 63% of its clients utilizing five or more platform modules, and slightly over a quarter adopting seven or more, the company’s successful software-as-a-service land and expand strategy comes to the fore. Management’s estimation of the total addressable market for AI-native security platforms at around $100 billion in the calendar year 2024 (projected to rise to $225 billion by 2028) underscores CrowdStrike’s potential for extensive prolonged growth.
The Cloud-Based Innovator: Workday
Workday (NASDAQ: WDAY) provides a cloud application for finance and human resources functions, equipped with embedded AI and machine learning analytics. With a robust client base encompassing over 10,000 global businesses across 175 nations, including 70% of the top 50 Fortune 500 companies, the company boasts extensive reach and appeal. Total revenue for the initial nine months of 2024 soared by 16.8% from the previous year to hit $5.3 billion, with subscription services constituting 90.7% ($4.8 billion). Notably, the company achieved a net income of $192.5 million, marking a turnaround from the prior year’s net loss of $241.1 million. Additionally, free cash flow for the first nine months totaled $972.3 million, a substantial 44% increase from the previous year’s $676.7 million.
Workday further bolsters its cloud offering by introducing AI updates such as generative AI capabilities and a manager insight hub, which provides automated insights for team oversight. The company also launched a new Workday AI Marketplace, facilitating customer access to trustworthy AI applications within the platform’s ecosystem. Moreover, Workday recently announced a collaboration with Insperity to jointly develop, brand, and market a comprehensive human resources solution tailored for small and medium-sized enterprises. The company projects a total addressable market of approximately $142 billion, underlining ample room for business expansion and revenue growth.
The Streaming Colossus: Netflix
Netflix (NASDAQ: NFLX) reigns as a frontrunner in the streaming services realm, offering an extensive repertoire of movies and TV series catering to a global audience. In 2023, the company reported an uptick in revenue, profitability, and free cash flow. Revenue registered a 6.7% year-over-year increase to $33.7 billion, accompanied by a 23.5% climb in operating income to $6.9 billion. Net income for the year tallied $5.4 billion, marking a 20.4% surge from the previous year. The surge in free cash flow was even more pronounced, skyrocketing to $6.9 billion in 2023 – a more than fourfold surge compared to the $1.6 billion in 2022. Netflix further bolstered its membership levels, soaring to a record 260.3 million, nearly 13% higher year-over-year, underscoring the continued allure of its movie and TV series lineup.
Netflix’s prospects for the upcoming year are equally promising. The company envisions a $600 billion revenue potential across pay TV, film, games, and branded advertising, with its current market share constituting only around 5% of this addressable market. TV viewing remains below 10% in each country, representing a substantial untapped prospect to expand Netflix’s outreach. Renowned for its extensive series of original TV shows and the sizable audience drawn to these titles, Netflix secured top spots for original TV series and films for 48 and 41 out of 52 weeks, respectively, in 2023.
Employing analytics to discern customer preferences, Netflix not only fosters higher retention but also stimulates customer referrals, thereby augmenting acquisition. The company also exhibits the agility to periodically adjust prices, fuelling further investment to diversify its library of movies and TV shows. Notably, the advertisement tier has gained swift traction, capturing 40% of new signups in the advertising markets targeted by Netflix. The crackdown on account sharing, coupled with rising sign-ups, mirrors the company’s commitment to sustainable growth.
Netflix also identifies a near-term addressable market of around 500 million connected TV users, excluding China and Russia, set to expand alongside the global surge in broadband penetration.
Should you invest $1,000 in CrowdStrike right now?
Before you buy stock in CrowdStrike, consider this:
The Motley Fool Stock Advisor analyst team identified what they view as the 10 best stocks for investors to buy now, and CrowdStrike did not make the cut. These 10 stocks have the potential to yield substantial returns in the coming years. The Stock Advisor service provides investors with a clear roadmap for success, offering guidance on portfolio development, regular updates from analysts, and two new stock picks monthly, outpacing the S&P 500’s returns since 2002*.
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Royston Yang has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike, Netflix, and Workday. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
