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The latest dip in technology stocks has many investors taking a hard look at CrowdStrike Holdings (NASDAQ:CRWD) stock.

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CrowdStrike is a computer security company founded almost a decade ago with a "cloud first" model. It has since become a leading endpoint security vendor.  Revenue should grow over 50% this year, approaching $1.5 billion. There may even be profits, albeit small.

Leadership in a popular niche has made CrowdStrike an extremely profitable investment. The market cap is $54.5 billion. But when the sell orders come in, stocks selling at 36x revenue are often the first to be sold. Shares are down 12% since the end of August.

The question of the day is, buy the dip?

Leadership in Question

Computer security is a tough business. Leadership can easily be overcome by new techniques. Growth can be great, but companies must invest ahead of that growth. Losses are the norm. Stocks can be volatile. That's why it makes sense to wait for a correction, like the one now underway, before pouncing on them.

The question for CrowdStrike is whether it can maintain its leadership against new competitors like SentinelOne (NYSE:S), which came public in June. SentinelOne's approach is to use an artificial intelligence algorithm to get ahead of the bad guys. The stock has outperformed CrowdStrike's since its IPO.

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Goldman Sachs (NYSE:GS) recently downgraded CrowdStrike based on its price. Analyst Brian Essex called SentinelOne his favorite play in endpoint security.

As tech stocks have rolled over in September, SentinelOne has rolled over more, down 23% since Sept. 16. CrowdStrike is down just 4% since then.

Still Being Boosted

CRWD stock still has its boosters. One is our Louis Navellier. Second quarter earnings beat estimates, he writes, with 1,660 new subscription customers.

An executive order telling agencies to beef up cybersecurity was followed by CrowdStrike getting its Falcon Forensics listed on the government's govcloud. Falcon Forensics also received FedRAMP authorization, making it easier for bureaucrats to buy. This means more government revenue is on the way. Navellier called the stock comfortably within his buy zone.

Navellier's article also cited Goldman Sachs' note as a positive. Essex maintained his price target of $305, which is 26% above where it's now trading. Navellier's price target is conservative, below the average price target at Tipranks, which is $314.

What's impressive to our Mark Hake is CrowdStrike's cash flow. The company had $256 million in operating cash flow during the July quarter.

There's something more important than charts to me. That is whether CrowdStrike can stay ahead of competitors.

Integration with UiPath (NYSE:PATH) gives Falcon new capabilities to act against software "robots," automated programs that are now the biggest threat in security.

The company's recent Overwatch Report says hackers are now acting on breaches three times faster than before, and there are greater threats coming from China. This means more demand for systems like CrowdStrike.

The Bottom Line on CRWD Stock

Few companies are worth 36x their revenue. The best computer security stocks are an exception, given their fast growth and the premium placed on leadership.

The recent fall in the Nasdaq composite is approaching correction territory. It's down about 6% from its high on Sept. 8. It's hard to call market bottoms but we seem to be approaching one.

If you're looking for capital gains, now might be a good time to buy CrowdStrike. If you're of sporting blood it might be a better time to look at SentinelOne. The cyberwar shows no signs of slowing down, and it's useful to own an arms merchant during wartime.

On the date of publication, Dana Blankenhorn held no positions in companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Living With Moore's Law: Past, Present and Future available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.

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