Investors with some cash sitting on the sidelines should be looking to deploy it and take advantage of some fantastic buying opportunities out there at the moment. While it’s wise to always keep some portion of an investment portfolio in cash, remember that you are doing so with the intent to deploy it at a moment’s notice when a good deal presents itself.

That ready-to-go cash can now be put to use on three stocks with great long-term potential that are currently selling at discounted prices: CrowdStrike Holdings ( CRWD 1.79% ), Autodesk ( ADSK 2.75% ), and Twilio ( TWLO 0.46% ). All have been sold off significantly, yet each produced great 2021 results and each is looking forward to a similarly successful 2022.

Person looking at data on a screen.

Image source: Getty Images.

1. CrowdStrike

Cybersecurity is CrowdStrike’s niche, and it does it better than nearly anyone else. Through its security cloud product, CrowdStrike protects endpoints from breaches, protecting networks no matter where employees are accessing it from. With an uptick in cyberattack risk due to the Russia-Ukraine war, cybersecurity has never been more important.

Customers have been quick to adopt CrowdStrike’s solution. At the end of the company’s 2017 fiscal year (Jan. 31, 2017), it had only 450 customers. Fast-forward five years and its customer base is up to 16,325 at the end of fiscal year 2022, with a 65% jump just from fiscal year 2021. Customers are also expanding their use of CrowdStrike’s products. The company offers more than 20 different modules that perform different tasks like firewall management and malware analysis. The business had 47% of customers using four or more modules in Q4 of fiscal 2019. By Q4 of fiscal 2022, that share of customers had risen to 69%.

Both new customers and product expansion led to CrowdStrike’s full-year fiscal 2022 sales of $1.45 billion, growing 66% from fiscal 2021. While it’s still not profitable because of heavy stock-based compensation, CrowdStrike is free cash flow (FCF) positive and posted a 30% FCF margin.

This is a robust company that doesn’t need outside funding and works with 254 of the Fortune 500 companies. CrowdStrike management estimates it will be going after a $116 billion market opportunity by 2025, which means this cybersecurity company is just getting started and its stock should be purchased at a discount today.

2. Autodesk

A more mature company than CrowdStrike or Twilio, Autodesk provides vital software for engineers and architects to do their everyday job. Along with it being the industry standard in its field, it is also expanding into segments like augmented and extended reality to provide increased collaboration between designers and clients.

Autodesk is a globally diversified company, as demonstrated by the table below.

Region Percentage of Revenue FY 2022 YOY Growth
Americas 40% 14%
Europe, Middle East, and Africa 39% 15%
Asia-Pacific 21% 19%

Source: Autodesk. YOY = Year-over-year.

Because Autodesk is a mature company, it is optimized for profits. Its annual revenue hit $4.39 billion in fiscal 2022 (ended Jan. 31), which grew 16% from fiscal 2021. Autodesk converted 34% of that revenue into free cash flow and 32% into non-GAAP (adjusted) operating income. Autodesk had a one-time lease charge and tax situation that caused fiscal 2022’s operating income to drop and fiscal 2021’s to rise, making the non-GAAP figure more meaningful. When compared with fiscal 2021, non-GAAP operating income rose 26%.

After Autodesk’s conversion to a subscription model, the company has the power to raise prices as necessary to offset any internal cost increases. Because its users are locked into the product and have few choices to switch to, Autodesk holds massive pricing power. This attribute makes this company a great stock to purchase in the market downturn.

3. Twilio

If you’ve ever received a text from a business about an appointment reminder or a confirmation, then you’ve likely interacted with Twilio’s product. Its software allows non-software engineers to easily create the coding necessary to interact with customers over text, email, video, and voice. It does this through application program interfaces that basically allow users to plug and play programs to easily create communication solutions.

Twilio’s financials are complicated by the numerous acquisitions it has made over the past few years. Excluding acquisitions made after Nov. 1, 2020, Twilio grew its Q4 (ending Dec. 31, 2021) sales 34% year over year and 39% when 2020’s U.S. political campaign revenue is not factored in. This aligns with CEO and co-founder Jeff Lawson’s guidance of at least 30% organic revenue growth over the next three years.

One mark against Twilio is its consistent unprofitability. The company has never turned a profit because it is working to capture as much market share as possible. As its growth-at-all-costs phase passes, Lawson also commented Twilio will achieve consistent non-GAAP profitability starting in 2023.

Through its time on the public markets, Twilio has rarely traded below a price-to-sales ratio of less than 10.

TWLO PS Ratio Chart

TWLO PS Ratio data by YCharts

Even with the business entering into a new phase, investors can be confident they are not overpaying for this solid growth stock.

Investor takeaway

With stock for CrowdStrike (down 29%), Autodesk (down 38%), and Twilio (down 64%) all trading well off their all-time highs, it’s time that long-term investors take another look at these businesses. Each represents a great purchasing opportunity because the businesses are not struggling the way the stock price drops would seem to indicate. Growth investors should consider scooping up each of these stocks with a three- to five-year holding period in mind.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.





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