The Way to Play the Latest Ransomware Attack on U.S. Infrastructure

After a cyberattack briefly crippled a major U.S. supplier of gas to the East Coast last month, cyber criminals shifted their focus this week to yet another piece of critical infrastructure – the meat supply.

The world’s largest meat processor, JBS SA (JBSAY), told the White House that a group likely originating in Russia carried out the ransomware attack, which shut down all nine JBS beef plants in the U.S. on Tuesday.

The impacted plants handle about 25% of the beef and 20% of the pork processed in the U.S. Also hit by the attack was the company’s subsidiary, Pilgrim’s Pride Corporation (PPC). Up to 10,000 jobs in the U.S., Australia and Canada were impacted by the plant closures.

Meat buyers are saying it could be a matter of time before the subsequent jump in wholesale prices for beef and pork impact consumer prices as well.

Interestingly, even though JBS has said its plants in the U.S. will be back online today, a disruption that lasts just one day can seriously impact wholesale beef prices, industry analysts have said.

The FBI said Wednesday the ransomware attack was carried out by Revil/ Sodinokibi, a Russian “ransomware-as-a-service” criminal gang. The gang has previously targeted the Taiwanese computer manufacturer Acer, London-based foreign currency exchange, Travelex, and the Australian healthcare company UnitingCare Queensland, among others, demanding millions in ransom to return operations to normal.

The White House said it is not “…taking any options off the table in terms of how we may respond…” and that President Biden will address the matter with Russian President Vladimir Putin when the two meet in a couple of weeks.

A little over three weeks ago, in the wake of the Colonial Pipeline attack that impacted gas supplies on the East Coast, President Biden signed an executive order to ramp up cybersecurity measures for federal computer networks, including requirements agencies encrypt their data, develop updated plans to use cloud-based systems securely and other cybersecurity measures.

Experts have been warning businesses large and small for years about the growing threat of cyberattacks, especially to companies that deal with critical infrastructure, like the food and energy supply.

Cybersecurity leader CrowdStrike Holdings, Inc. (CRWD) tracked 1,400 ransomware and data extortion schemes in 2020 alone, with the majority impacting manufacturers, industrial companies, and engineering and technology businesses.

Clearly, cybersecurity attacks are a massive problem and won’t be going away anytime soon. So, for investors, there’s a lot of investment opportunity here, too.

Personally, I see a lot of potential with CrowdStrike Holdings. So, if it’s not on your radar, it should be. This fundamentally superior company offers real-time endpoint security, threat intelligence and cloud workload protection, helping prevent cyberattacks on and off an enterprise’s network.

The company’s platform, The CrowdStrike Falcon, utilizes its proprietary CrowdStrike Threat Graph to identify security threats and prevent data breaches. CrowdStrike boasts that its platform combines artificial intelligence (AI) and machine learning with behavioral analytics and 24/7 threat hunting all in one solution to protect all workloads on the network—cloud-based, on-premise and virtual environments.

CrowdStrike offers 16 modules on its Falcon platform, which includes next-generation antivirus protection, firewall management, malware search engine and analysis, threat intelligence and threat hunting. The company also acquired Preempt Security in September to expand its offerings to include identity protection.

Now, as far as fundamentals are concerned, CRWD doesn’t disappoint. Case in point: Its blowout first-quarter earnings report, released on Thursday.

Fiscal year 2022 kicked off on a strong note for the company, as it added 1,524 new subscription customers during the first quarter. Company management commented, “The CrowdStrike name has become synonymous with best-in-class cybersecurity protection and a platform that just works. Customers of all sizes are increasingly choosing CrowdStrike as their security platform of record…”

For the first quarter in fiscal year 2022, revenue soared 70% year-over-year to $302.8 million, with subscription revenue accounting for $281.2 million. That topped forecasts for revenue of $291.4 million. First-quarter earnings surged 400% year-over-year to $0.10 per share, up from $0.02 per share in the same quarter a year ago. Analysts were expecting earnings of $0.06 per share, so CrowdStrike posted a 66.7% earnings surprise.

Looking forward to the second quarter, CrowdStrike expects revenue between $318.3 million and $324.4 million and earnings per share between $0.07 and $0.09. That’s nicely higher than analysts’ current projections for second-quarter earnings of $0.06 per share on $310.19 million in revenue.

Currently, the company also earns a “Buy” rating in my Portfolio Grader, with a Total Grade of “B” and a Quantitative Grade of “A,” which means there is strong institutional buying pressure under this stock.

Now, despite the strong earnings results, the stock pulled back on Friday. However, this doesn’t worry me one bit. The reality is we remain in an environment where large-cap stocks need to “burp” and digest their gains before they make their move higher, and I believe this is the case with CRWD.

So, I view today’s weakness as a buying opportunity.

CrowdStrike Holdings isn’t the only stock I like right now. It’s why my Growth Investor Buy Lists are chocked-full of fundamentally superior stocks that are also highly rated in Portfolio Grader. This includes stocks in several of the most explosive sectors of the economy, like internet technology, semiconductors, artificial intelligence (AI), and healthcare. So, my Growth Investor Buy List represents the crème de la crème of growth stocks with strong sales and earnings.

In fact, my Growth Investor Buy List stocks are characterized by 62.6% average annual sales growth and 57.1% average annual earnings growth. And my Growth Investor stocks have also benefited from positive analyst revisions, as earnings estimates have been increased by an average 17.8% in the past three months.

And as inflation continues to run hot in the economy, I expect investors will continue to flock to inflation hedges like my Growth Investor stocks in the coming weeks and months.

If you’re interested in my Growth Investor service, now is the perfect time to join. I released my Growth Investor June Monthly Issue last Friday with five new buys, my latest Top 5 stocks list, and my outlook for the market this summer.

There will be a lot to talk about, so click here now to get started!

Note: The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owned the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

CrowdStrike Holdings, Inc. (CRWD)

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