Salesforce and CrowdStrike have plenty of growth potential, even in this bearish environment.

The year 2022 has been quite tough for Wall Street, and the challenges show no signs of easing up soon.

At the Federal Reserve’s 45th annual economic symposium held last month in Jackson Hole, Wyoming, Chairman Jerome Powell highlighted the need to increase interest rates and keep them high for a longer period in a bid to bring inflation down to the 2% goal. He also noted that according to Federal Open Market Committee June 2022 projections, the median benchmark interest rate may be just below 4% until the end of 2023.

Investors remain concerned the Federal Reserve’s aggressive stance to curtail inflation will result in a significant economic slowdown in the coming months. Weak investor sentiment has been pushing down share prices of many stocks, including those with strong fundamentals.

The current market correction is now presenting an opportunity to pick up promising companies like Salesforce ( CRM -4.55%) and CrowdStrike ( CRWD -5.33%) at significant discounts compared to their historical prices. 1. Salesforce

Shares of cloud-based customer relationship management (CRM) leader Salesforce tumbled in response to the company’s second-quarter results. While fiscal 2023 second-quarter revenue and earnings surpassed analysts’ expectations, investors were disappointed with guidance for the third quarter and full year.

The impact of macroeconomic and foreign exchange challenges on Salesforce’s growth prospects cannot be ignored. Investors, however, should also remember the company has been the market-leading CRM player by revenue for the past nine consecutive years. The company’s addressable market is estimated to be worth $284 billion in 2026, implying a compound annual growth rate of 13% from 2022 to 2026. Even with the company raking in $29.3 billion of revenue in the past 12 months, there is still plenty of growth potential.

Salesforce has set a goal to reach $50 billion in revenue by fiscal 2026. This target is achievable, considering the strength of the company’s Customer 360 product portfolio across industry verticals and its robust go-to-market strategy. Since a CRM system is deeply entrenched across sales and marketing functions at companies, replacing one can prove quite costly in terms of time and money. This has ensured a sticky revenue base for Salesforce.

The company is also profitable and free-cash-flow positive. Salesforce is now focusing on aggressively returning value to shareholders, as evidenced by its first-ever share repurchase authorization of $10 billion.

Despite these strengths, Salesforce is currently trading at historically low valuation levels. The stock sports a price-to-sales ratio of 5.3 times, the lowest it has been in the past decade. The company may, however, see this valuation metric rise in tandem with revenue growth.

Against this backdrop, investors can consider taking a small position in this mature cloud company in 2022. 2. CrowdStrike

Shares of leading cybersecurity player CrowdStrike have also slumped after the company reported its fiscal 2023 second-quarter results on Aug. 30. While the company’s revenue and earnings surpassed consensus estimates, investor expectations were even higher for this expensive stock .

However, the real growth story of this cloud-native endpoint and workload protection specialist is intact, making the stock a buy with every dip. The company has been consistently growing its revenue, subscription customers, subscription revenue, and annual recurring revenue year over year by over 50% for the past several quarters. The company is also cash-rich with a balance of $2.3 billion at end of the fiscal second quarter. These metrics are expected to remain strong in future quarters since corporate spending for cybersecurity is no longer discretionary and remains mostly unaffected even in recessionary times.

CrowdStrike’s Falcon platform comprises 20 cloud-based subscription modules. In the second quarter, 59%, 36%, and 20% of subscription customers adopted five or more, six or more, and seven or more of these modules, respectively. The increasing cross-selling success has also made CrowdStrike’s ecosystem highly sticky — with the Falcon platform deeply embedded into a broad number of clients’ daily functions, it becomes increasingly difficult to switch to competing products.

The company has built a loyal customer base, fueling even more business expansion. The company’s gross retention rate has been above 90% for over four years, implying very low churn rates. Its dollar-based net retention rate for subscription-based annual recurring revenue has also been consistently above the 120% benchmark for the past three years. This means that for more than three years, the subscription customer base has been spending over 20% more on CrowdStrike offerings as compared to the same quarter of the previous year.

Shares of CrowdStrike are currently trading at a 42% […]

source 2 Remarkable Growth Stocks to Buy on the Dip Now

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