Ritholtz Wealth Management CEO Josh Brown and colleague Sean Russo used their latest “The Best Stocks in the Market” column at CNBC to stake out a clear position on security software: four names earn a spot, two do not.
CrowdStrike Holdings, Inc. (NASDAQ:CRWD), Palo Alto Networks, Inc. (NASDAQ:PANW), Fortinet, Inc. (NASDAQ:FTNT) and Cloudflare, Inc. (NYSE:NET) made the list. Zscaler, Inc. (NASDAQ:ZS) and SentinelOne, Inc. (NYSE:S) did not.
- CRWD stock is moving. See the real-time price action here.
CrowdStrike Leads the Group
Brown called CrowdStrike “one of the cleanest charts in the sector.” Russo noted the stock is up 104% this year and has returned 58.8% since mid-May, against 13.8% for the iShares Expanded Tech-Software ETF (NASDAQ:IGV) and 3.5% for the S&P 500.
The fundamentals traveled with the tape. Second-quarter revenue rose 26% to $1.47 billion, net new annual recurring revenue hit a record $333 million, and ending ARR reached $5.84 billion. Falcon Flex now carries $2.29 billion in ARR, up 101%. Management lifted full-year net new ARR guidance to $1.35 billion at the midpoint.
CrowdStrike shares jumped roughly 14% on Sept. 14 as capital rotated into cybersecurity names on AI-threat headlines. CEO George Kurtz told CNBC that with AI-enabled attacks, “the genie’s out of the bottle.”
Brown owns CrowdStrike and isn’t trading it. For everyone else, he flagged $215 to $220 as the post-earnings base, with the 50-day at $207 as the deeper line. RSI sits at 60 — constructive, not stretched.
Palo Alto and Fortinet
Palo Alto Networks gets the same thesis with a weaker chart. After running from the $184 area in early May to just under $400, each rally has topped out lower, and shares now trade near $364. RSI of 53 reads as drift. Brown’s reference is the $320 to $330 shelf, tested repeatedly and defended each time.
A May earnings gap from $90 to $108 kicked off a steady climb of higher highs and higher lows, and shares now sit at $170 inside a $150 to $175 consolidation. The 50-day at $160 is rising. Brown’s caution: Fortinet has a history of post-earnings blowups, so “keep the leash short.”
Cloudflare’s Breakout
Cloudflare isn’t a pure security name, but its DDoS protection, zero-trust products and AI workload delivery put it in the conversation.
Shares hit a new high last week with a breakout in progress, and the 200-day at $228 has finally turned up after months flat. Brown’s exit for short-term holders is a close under the 50-day. Longer-term money should watch $260 to $270, the base the run started from.
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The Two Left Off
Zscaler has lost about half its value since peaking last October, though the chart is finally stirring. Shares crossed back above the 200-day for the first time this year, a golden cross is forming, and RSI at 63 marks a 12-month high. Cheap relative to peers, and worth watching — still not on the list.
SentinelOne fails the $25 billion market-cap screen, since momentum works better on widely followed large caps. Brown added two personal objections: the ticker once belonged to Sears, and chasing the smaller name in a hot sector usually ends badly.
He closed the column with a solid reminder for readers: “Don’t drink and drive. Don’t buy a whole life policy. Don’t trade the ninth best stock in a sector. Man’s gotta live by a code, and this is mine.”
Photo: Alicia97 / Shutterstock
