Best Stocks: Two tech names bucking the market turbulence with businesses that can beat a recession

CNBC

05-05-2025

(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh here — This week we have a few new entrants to the Best Stocks in the Market list I keep with Sean, including two stocks I own personally as a long-term shareholder: CrowdStrike and Uber . These names are among the best performers of the year so far and have been rallying for weeks now. The broad comeback for markets last week was certainly felt among the stocks on our list. Interestingly, utilities remained one of the largest and most consistent pockets of leadership within the Russell 3000 even as more stocks from other sectors work their way back toward the old highs. Sector Leaderboard As of the morning of May 5, there are 72 names on The Best Stocks in the Market list Top 5 Best Stocks by Relative Strength: RBLX , 78 NFLX , 76 CAH , 76 VRSN , 75 APH , 74 New additions: CrowdStrike, Uber Added: CrowdStrike Holdings Inc (CRWD) Date Added: 5/2/2025 Josh: CrowdStrike doesn't necessarily rely on rallies for AI-related stocks and the Mag 7 - it's had a much better year than pretty much all of them. But when the 'animal spirits' around the AI theme come alive again, investors tend to remember that there is no AI theme without massive, consistent and continued spending on cybersecurity. Last week we heard from Meta, Microsoft and Amazon that their AI spending plans for the second half of this year are not only intact, they might prove to be conservative. Cyber stocks built on the recent rally and CRWD has now retraced almost the entire sell-off since the Nasdaq topped in February. CrowdStrike is not a value stock or a consumer staple, but it has been relatively defensive versus the rest of the technology sector while the market has sold off. It has also more than held its own as the bear turned into a bull. This is the very definition of what it means to be a Best Stock . Welcome to the list. Sean: CrowdStrike is widely regarded as one of the premier cybersecurity companies in the world, specializing in cloud-delivered protection of endpoints, workloads, identities, and data. Its flagship platform, Falcon, is built on a scalable architecture that continuously analyzes billions of events in real time, enabling proactive threat detection and response. CRWD checks the boxes of AI, cybersecurity, and more recently, momentum. CrowdStrike closed above its July 2024 outage level, and is nearing its recent all time high prior to so-called Liberation Day in early April when President Donald Trump rolled out super-sized tariffs before later walking most of them back. The market bottomed on April 9 and CRWD is up 17% from that day, making it the 19th best performing S & P 500 stock from the trough. CRWD has some of the highest customer retention rates and growth rates across the cyber landscape. CRWD's last 4 quarters of YoY revenue growth were 33%, 32%, 29%, and 25%, respectively. As of CRWD's last earnings report, they earn 80% gross margins, leading to 21% operating margins and a 27% free cash flow margin. Crowdstrike's earnings are growing, but they're also higher quality as their products are billed on a recurring basis. As of Q4 2025, CRWD earned $1.3B in ARR (annual recurring revenue), up 50% YoY. ARR is considered higher quality because it reflects predictable, contract-based revenue streams that provide greater visibility and stability compared to one-time or transactional sales. Importantly, CrowdStrike's business model is inherently resilient to global trade dynamics, including tariffs. Unlike hardware-based companies that manufacture and ship physical goods across borders, CrowdStrike operates entirely within a digital infrastructure. Its product is delivered via the cloud, meaning it requires no international shipping, warehousing, or physical supply chain exposure. CRWD has exceeded earnings per share expectations for its last four quarters by an average of 10%. Last quarter, the company beat by almost 20%. Risk Management: Josh: Short term traders may want to rely on the $400 level, where it's beginning to form support. Longer term investors can look for the 200 day moving average - around $335 for a stop loss. Crowdstrike reports on Tuesday, June 3rd after the market's close. Expect the typical tech stock volatility around that report. Added: Uber Technologies Inc (UBER) Date Added: 5/2/2025 Sean: Uber is the fifth best performing stock in the S & P 500 this year, up 40%. It's the second best performing stock in the S & P Tech sector year-to-date, trailing only Palantir up 64% this year, and it's the second best performing stock in the S & P Industrials sector behind Howmet Aerospace, up 41% YTD. (There is some disagreement amongst the classification community as to what UBERs sector truly is.) UBER is executing at an incredibly high level. The company reported its strongest quarter ever in Q4 2024. The company achieved record demand in both mobility and delivery segments, surpassing its three-year outlook for gross bookings, adjusted EBITDA, and free cash flow. UBER also entered into an accelerated share repurchase agreement to buy back $1.5 billion of common stock. UBER trades at a trailing 18x price to earnings and a forward 20x price to earnings, both cheaper than current S & P 500 valuations. On a price to free cash flow basis, UBER trades at a 26x multiple, much lower than its 3yr median multiple of 49x. As UBER continues to execute, the stock is starting to see incremental buyers come in. From the start of 2024 through 'Liberation Day,' the stock was up 13% in total return, underperforming the S & P 500 which returned 15% the same period. Since 'Liberation Day' through today, UBER is up 21% vs 6% for the S & P 500. Interestingly, as the recession whispers get louder, UBER is getting stronger. There is a known dichotomy between UBER and recessions called the trade-down effect. Recessions typically expand the pool of gig economy workers. As job losses mount and people seek alternative income streams, Uber sees a surge in new drivers joining the platform. This deeper driver pool enhances service reliability, shortens rider wait times, and can alleviate pricing spikes, improving customer experience and keeping riders in the app. It's worth pointing out that Uber was born in the midst of the worst recession in decades, the Great Financial Crisis of 2008. Uber's diversified service offerings also provide resilience. Even if riders downgrade from premium tiers to lower-cost options like UberX, the company retains their business and maintains engagement on the platform. This flexibility allows Uber to capture a broad spectrum of demand, ensuring it remains a go-to transportation option even as consumer budgets shrink. In combination, these factors could position Uber well to absorb economic shocks, gain market share, and strengthen its two-sided marketplace during periods of macro uncertainty. And with a reasonable valuation, a capable management team, higher-than-market earnings growth, and momentum providing a tailwind, Uber is in a great position. Risk Management: Josh: Short term traders can look to cut losses around the $80 mark while longer term investors should keep a close eye on the $75 level - a key area of support the past year. Uber reports earnings before the market opens on Wednesday, May 7th. Risk-averse investors sometimes opt to sit these events out given the binary nature of market reactions to these reports. The risk of doing so is missing out if the company can positively shock the market with a beat and raise. The benefit is not starting out with a big drawdown should the company disappoint. One solution to this conundrum is to start a position in stages if one is highly sensitive to short-term volatility. DISCLOSURES: Josh personally owns Uber, CrowdStrike All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . 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