CrowdStrike (CRWD:NASDAQ) $366.36

Gain to date: 41.5%

It is often a good strategy to buy quality companies when something goes wrong and we saw the opportunity to play this dynamic at cyber security giant CrowdStrike (CRWD:NASDAQ) last summer. The company had a central role in a massive global IT outage involving  Microsoft (MSFT:NASDAQ) operating systems in July 2024 but we made the brave call that these issues would not weigh on the stock in the long term.

WHAT HAS HAPPENED SINCE WE SAID TO BUY?

As we hoped they would, the shares have recovered all of the ground lost at the time. CEO George Kurtz perhaps stretching things by suggesting to the Financial Times that in going through such an experience, something none of its rivals have, it has a competitive edge.

What undoubtedly seems to be the case is customers are sticking with CrowdStrike, the company reporting a 97% customer retention rate for the three months to 31 October while also beating analysts expectations for the quarterly period with $1 billion in revenue, up 29% year-on-year.

The company has received credit for its handling of the outage once it had occurred although one customer – Delta Airlines (DAL:NYSE) – has filed a lawsuit seeking damages which estimate the impact at more than $500 million.

Even if they want to, it may be hard for CrowdStrike clients to go elsewhere given how embedded the firm’s products and tools are in their systems and day-to-day operations. There have also been suggestions that Microsoft’s systems might have been just as, if not more culpable in the outage.

WHAT SHOULD INVESTORS DO NOW?

Cyber security remains a growth area and CrowdStrike is a leading player in this space. However, the shares do look expensive, notwithstanding the fact it only recently moved into profitability and earnings are poised to grow rapidly, on a January 2026 PE of 83.5 times. Given what we were looking to achieve with this trade has already played out, we reckon taking profit now might be prudent. 

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