Cloudflare currently trades at $101.61 and has been a dream stock for shareholders. It’s returned 422% since November 2019, blowing past the S&P 500’s 91.1% gain. The company has also beaten the index over the past six months as its stock price is up 35.1% thanks to its solid quarterly results.
Is it too late to buy NET? Find out in our full research report, it’s free.
Why Is NET a Good Business?
Founded by two grad students of Harvard Business School, Cloudflare (NYSE:NET) is a software as a service platform that helps improve security, reliability and loading times of internet applications and websites.
1. Skyrocketing Revenue Shows Strong Momentum
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Cloudflare’s 38.7% annualized revenue growth over the last three years was exceptional. Its growth surpassed the average software company and shows its offerings resonate with customers. 
2. Billings Surge, Boosting Cash On Hand
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Cloudflare’s billings punched in at $447.3 million in Q3, and over the last four quarters, its year-on-year growth averaged 24.8%. This performance was impressive, indicating robust customer demand. The high level of cash collected from customers also enhances liquidity and provides a solid foundation for future investments and growth. 
3. Projected Revenue Growth Is Remarkable
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite, though some deceleration is natural as businesses become larger.
Over the next 12 months, sell-side analysts expect Cloudflare’s revenue to rise by 25.6%. While this projection is below its 38.7% annualized growth rate for the past three years, it is eye-popping and implies the market sees success for its products and services.
Final Judgment
These are just a few reasons why we think Cloudflare is a high-quality business, and with its shares beating the market recently, the stock trades at 17.2x forward price-to-sales (or $101.61 per share). Is now a good time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More Than Cloudflare
The Trump trade may have passed, but rates are still dropping and inflation is still cooling. Opportunities are ripe for those ready to act - and we’re here to help you pick them.
Get started by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,691% between September 2019 and September 2024) as well as under-the-radar businesses like United Rentals (+550% five-year return). Find your next big winner with StockStory today for free.
