Investors can find great firms through stock splits. Average corporations rarely experience continuous price appreciation, making splits necessary. Split is slightly immaterial. Investors know a company is performing well by share price appreciation.
For instance, CrowdStrike (NASDAQ: CRWD) and MercadoLibre (NASDAQ: MELI). Their shares rose 710% and 185% in four years. Both stocks outperformed the S&P 500, which returned 90%. Strong financial results and great growth prospects were behind both outperformances
At their current pricing, CrowdStrike and MercadoLibre are stock split possibilities, but both are good investments nonetheless. The reason.
1-CrowdStrike Software from CrowdStrike protects. More than two dozen modules on its platform cover numerous security industries, and the company is powerful in several of them. CrowdStrike leads endpoint security and grew faster than its competitors last year. It also leads cloud security and threat intelligence.
Investors credit superior artificial intelligence (AI) for simplifying security operations by consolidating workload. As George Kurtz said, "Our AI trained on cybersecurity's richest dataset drives the industry's most comprehensive protection and automation." CrowdStrike also streamlines security operations by consolidating activities on a single platform, unlike other firms that deploy dozens of point products.
CrowdStrike had a good fourth quarter. Revenue rose 33% to $845 million as new clients and old customers bought more modules. Net income from non-GAAP sources quadrupled to $236 million. With a 98% gross retention rate, management keeps most of its clients. Investors can anticipate similar returns.
CrowdStrike is expected to surpass the industry as it gains share as cybersecurity spending grows 12% yearly through 2030. The Fortune Future 50, an annual ranking of the world's largest firms by long-term growth, placed the company third in 2023. Over the next five years, Wall Street anticipates CrowdStrike sales to climb 28% annually.
Its 25.4 times sales valuation is acceptable but not inexpensive. This growth stock is a good buy for investors comfortable with volatility who aim to hold it for three to five years.
2. Merc/Libre Latin American e-commerce leader MercadoLibre. Not only does it run the region's most popular online marketplace, but its subsidiaries offer complementary services. This includes payment processing, credit products (Mercado Pago and Crédito), logistical support (Mercado Envíos), and ad tech solutions
A strong network effect supports MercadoLibre. Merchants like popular markets, which increases product selection. The platform's incentives encourage shoppers, establishing a circle.
However, complementary services make MercadoLibre more appealing to merchants and consumers and increase corporate revenue. Management claims to have the fastest and largest delivery network in its primary regions.
Fourth-quarter results for MercadoLibre were good. Sales rose 42% to $4.2 billion, with commerce up 48% and fintech up 38%, both consecutive accelerations. Due to one-time tax dispute charges from 2014 and 2022, GAAP net income was constant at $165 million. Net income rose 166% to $383 million excluding those one-time charges.
As Latin America adopts e-commerce, digital payments, and digital advertising, MercadoLibre will benefit. Wall Street anticipates revenues to expand 19% annually over the next five years, but MercadoLibre is growing so fast that I think that projection is conservative. Since it does not charge for fulfillment services, the company has a large monetization opportunity.
5.4 times revenue is a reasonable valuation. Today, patient investors might buy a tiny investment in this growing stock.
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