Time to Buy?

In this Motley Fool Money episode, Motley Fool analysts Rick Munarriz and Tim Beyers and contributor Jason Hall dig into a document database developer and a cybersecurity leader that they believe can keep beating the market. They also have a short-form look at three long-term opportunities with an improv game that has a stock market bent.

They unpack:

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• A stock that soared 44%, but can keep moving higher in the long run.
• A cybersecurity leader that has bounced back after a whopper of a blunder last summer.
• The bullish case for three stocks, one point at a time.

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A full transcript is below.

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This podcast was recorded on Sept. 02, 2025.

Rick Munarriz: Ohio is high in the middle, but some states of investing can be high on both ends. I promise this will make sense soon because Motley Fool Money starts now.

I'm Rick Munarriz, and today I'm joined by fellow analyst Jason Hall and Rule Breakers lead analyst Tim Beyers. We're going to take a tug on a security stock blanket. We're also going to play an improv game with three stocks we think are worth a closer look. But first, do the Naysayers have a rango decree when it comes to MongoDB? MongoDB was one of the last week's biggest gainers. Shares of the document database platform operator soared 44% last week after posting well-received financial results. As investors, sometimes it's instinctive to sell into strength. If you were on the sidelines, it's easy to move on to a different playing field. Tim, you don't think it's too late to get in on the MongoDB story. What's your take on its latest results, and what it means for Motley Fool Money listeners?

Tim Beyers: Yeah, I got three words for you, Rick: growth is accelerating. Revenue from the Cloud-based Atlas database grew 29% in the second quarter. That is impressive. For those who don't know what Atlas is, essentially, think of the database that you could install in your own company, but you access it via the Cloud. That's Atlas. You can have it in any of your Cloud hosting environments, and it is growing increasingly popular. In fact, the company added 2,800 net new customers during the quarter, and that set a new record one quarter after Mongo broke a six-year record with 2,600 net new ads. The big Mo is with Mongo. My apologies. I just see Rick, and I just start riffing. I can't help myself. But if there is a story to key in on here, it's that the unit economics are getting better. Revenue growing 24% while operating expenses only grew 15% is a pretty good formula for long-term success. You can see it in other areas of the business, so for example, cash flow return on investment, where we take the cash flow from operations, and compare it to all of the cash available for investment, including all of the debt and all the equity. That grew to 8.96% over the trailing 12 months, and that was up from 5.26% in fiscal 2025. That's still not good enough. That's not above the cost of capital yet, but it's moving in the right direction, and the more we see this efficient growth, the greater the premium MongoDB stock will command. Nothing is assured, but I really like the direction of this company.

Jason Hall: It's hard to argue about what's going on with the business itself. The unit economics are better, generating positive free cash flow. They can live off their own balance sheet as they continue to grow. You take the growth accelerating, and the metrics behind the growth, it's better growth. You love to see that. But one of my biggest concerns, Tim, when we see a stock shoot up 40% in a single trading session, is investors buy and then be able to hold what is assuredly going to be a really volatile investment in the months and quarters that follow. Sales outstanding sold short has climbed all year, coming into this report, and it hit 6% of shares short right before earnings. Probably a short squeeze playing some role here in the stock going up. Why does that matter? Because it means that bears were buying the shares to close their short positions, not necessarily just a bunch of bulls that are long company. I'm curious, we're trying to be long-term and mindful of that. Does that really temper your near-term outlook, or do you just think this is a case of an excellent business that's really starting to show its ability to do those good things on the business side, trading for what should prove a good price for investors multiple years from now, no matter what happens in the Monster quarters ahead?

Tim Beyers: I think we say it's both. The short squeeze is probably a recognition that the business is improving faster than bearish investors expected, and so they fled, and now they're probably going to reestablish short positions again, and that could over the short term. Jason, you're right, that could push down the stock price in the short term. I think you can expect continued volatility. I think it would be naive to say, "Don't expect volatility. It's just going to go up into the right." That's just unlikely to happen, and there is still improvement needed. Let's be clear about that, too. MongoDB is still unprofitable. But the trajectory is looking really good. Something that Rick, you can speak to, but something we really value at Rule Breakers, is this maxim, not maximum, or maybe maximum, in this case, I hope. [LAUGHTER] But the maxim is acceleration tends to lead to more acceleration. Or as David Gardner likes to put it, winners keep on winning. Most investors can buy slowly as they follow the story because this will be so volatile, Jason. But yeah, I think it's a fair criticism. For me, it's one that I would like to build upon, but I like building slowly in these sorts of situations.

Rick Munarriz: Perfect. You won't see it in a lot of Wall Street manuals, but buy high, buy higher, might be the best forwards of market advice for long-term investors. Coming up next can lightning CrowdStrike twice. The cybersecurity specialist is a compounder in more ways than just as corporate moniker, but Jason thinks a smaller rival bears watching. Stay close. We're going to play ball with CrowdStrike.

Friday, July 19, 2024. CrowdStrike didn't die that day, but it did skip a beat. A faulty update to its Falcon sensor security software shut down millions of Windows-fueled systems. Airports, offices, hospitals were in limbo for more than an hour before CrowdStrike put in the fix. But the damage was already done to CrowdStrike's reputation and to its stock price. Shares of CrowdStrike would go on to plunge 23% over two trading days. It was a rough time to be a CrowdStrike shareholder, but history is kind. The shares are up 24% in the nearly 14 months since the day before the outage, up more than 60% since where the stock closed two days later. Is chaos a ladder or a bladder? Jason, you think CrowdStrike is doing well, but another player might be the better investment in the growing market for cybersecurity solutions. Let's talk about it.

Jason Hall: Yeah, so just to build on what's happened since CrowdStrike reported, since that outage in the quarters that it's reported, for business that happened after the outage happened, there's been issues. The company clearly has had to work harder to regain trust with existing customers and had to fight harder to win new business. Its margins took a hit. They're still down. Cash flows have weakened, and some of its growth focus metrics shrank. One in particular, net new ARR, measures the dollar value of net new business on an annual basis. Came in lower in the quarters that it's reported since after the outage. Now, sure, the company is still growing, but weaker margins, slowing growth, they don't lie. This is especially true. If we look at SentinelOne, which is CrowdStrike's much, much smaller pure play competitor in the AI-powered endpoint security space. We can get some contacts. SentinelOne reported strong and accelerating growth and higher growth rates than CrowdStrike. Some indication that, again, the end markets certainly healthy and growing, and further supporting that CrowdStrike is not exactly struggling, certainly having to work a lot harder to win and having to sacrifice some profitability in some cases. Now, this past quarter, we got just last week, CrowdStrike showed a little more life. That net new ARR number came in higher year-over-year. It's the first time that's happened since the outage. It was a record level, and it does look like its margins have at least stabilized and on an adjusted basis, they're pretty exceptional margins. On a GAAP basis, they're still good, but they've deteriorated more than the adjusted numbers make it seem.

Tim Beyers: It is interesting. The recovery has been pretty remarkable. I do can see that, Jason. I think it's been interesting to watch it. But how much do you think that net new ARR number is due to selling more into the existing customer base versus selling to new customers? The reason I asked this is reputationally, they took a hit, and so it would follow that if the recovery really is working well, then those customers that decided to stick it out, if those customers that stick it out are spending more, that would be a pretty darn bullish sign. Now, obviously, CrowdStrike needs a mix of both. We do know this. But they have spent years telling the street to pay attention to this metric. Hey, what's the proportion of the customer base that buys 5, 6, 7, or even eight-plus modules in the implementation? Today, the company says that I've just pulled this from the latest quarterly deck; 60% of customers generate at least 100K in ARR use eight or more of these CrowdStrike modules, and they've got more than 20 of them. I think it may even be more than 25. Let's just be generous and say it's about a third. Handicap it for me here, Jason. Where they were reputationally, what they're trying to do now, will more or less than 50% of CrowdStrike's growth over the next five years come from growing these massive customers from within or from winning massive multi-model or should I say, module deals upfront?

Jason Hall: I think overwhelmingly, it's going to come from existing customers for a couple of reasons. Number 1, this is the top dog in the space. It has, by far, the lion's share of the market already. Its growth rates are slower, but its revenue dollar growth is substantially larger than SentinelOne. It's basically adding about every quarter, its new revenue is equivalent to a SentinelOne quarter of total revenue. That's how big they are. We have a maturing industry. We have the top dog in the industry. I just don't think they can find enough net new business to generate that. I think one of the things with the slowing growth rates is probably some new customers that are coming to it that are probably starting small, and they're going to be adding more modules over time as they find that it is the best platform, and any concerns they have about issues like the outage that happened last year start to fade into the background. I think overwhelmingly, it's going to come from those existing relationships.

Tim Beyers: You've mentioned SentinelOne here. I've looked at this company. It is an interesting company, and I do wonder, is there a scenario where the lamb eats the lion? I know that sounds utterly absurd, but SentinelOne they have survived in this market and they've survived in this market for quite a long time. I have to imagine there's something special about this business, and maybe it's the AI imbued threat detection. Maybe that's a slightly better alternative. Is there something you've seen in looking at the business that makes you think SentinelOne is special?

Jason Hall: Well, SentinelOne, their purple product is the newest branding that they're using for a lot of their AI-driven things. A couple of things they highlight is the fact that they play well with others, which I think is important and how this is more a tech-driven AI-driven product and less people-driven, which is interesting. You think about CrowdStrike, that doesn't seem like it makes sense, but if you listen to what SentinelOne, what they say, maybe that's the case, some similarities. You have founders behind the business. I think you've got a little bit deeper experience in cybersecurity with CrowdStrike, but the founder and CEO of SentinelOne owns a quarter of the business. This is someone who's been deeply involved as well. We love those aspects of winning businesses that have the culture that comes with those founders that believe in the mission of what they're trying to do. I don't know if this is as much a case of the lamb eating the lion, so to speak, maybe more like a Pepsi-Coke situation, where it's just such a gigantic market that you can have multiple winners, which isn't always the case. We look at the history of a lot of rule-breaking businesses as investments. There's been one that's emerged that has disrupted, has become the top dog and has turned into the rulemaker. I think cybersecurity is so big that this, again, could be the Pepsi to the Coke here, and here's the interesting thing about it. If you look at the longer-term history, generally, Pepsi is actually been the better investment than Coke. I think you think about valuation with these two stocks right now. Right now, CrowdStrike, you're paying a similar multiple to what you were paying for the stock back when it was growing closer to 30% a year. It's growing at 20% a year now, and you're still paying for those multiples. For about a third that valuation, you can buy the lamb here. That's growing at a higher rates, and certainly trades for a much more compelling valuation.

Rick Munarriz: My money is still on CrowdStrike, which has more than doubled the S&P 500 this year, which brings us back to buy high, buy higher. When we get back from the break, we'll turn due diligence into an improvisational comedy art form. Can I get a suggestion? Stay with us? We're going to turn playtime into paytime.

I've been a Fool for what is now 30 years. I've also been helping run Miami's longest-running improv comedy theater for the past 13 years. I want to bring these two passions together now. Yes, and is a core principle of improv. You take something simple that your scene partner gives you, you build it up together. You bring a brick, not a cathedral. Jason, Tim, I want us to take a stock that we're passionate about, followed by simple bullish thesis. We'll then go around the room, yes ending the positives, then we'll yes but some potential concerns. When we're out at bullish or bearish bricks, one of us will just say end seen, and we'll move on to the next stock. Jason, let's start with you.

Jason Hall: MercadoLibre is the dominant first mover and top dog in both e-commerce and Fintech in the biggest economies in Latin America.

Rick Munarriz: Yes, and Latin America's earlier in the migration cycle for banking, Fintech, and e-commerce than the more advanced US market.

Tim Beyers: Yes, and payments in particular is a problem in the Latin American market. That Mercado Libre makes this simple and digital is crucial.

Jason Hall: Yes, and Mexico, in particular, is one of the most exciting, largest economies in Latin America, and Mercado Libre is really early in its journey in that country.

Rick Munarriz: Yes, and advertising revenue rose 38% in its latest quarter. This isn't a needle mover for Mercado Libre at this point, but it's an obvious growth opportunity given all the eyeballs it attracts.

Tim Beyers: Yes, and we are only just starting to see how big the payments processing part of Mercado Libre's business can be, and they've managed to reduce their risk materially that Mercado Libre can be not a bank, but a really slick payments provider, and not get caught up with consumers a bad credit is pretty good.

Jason Hall: Yes, but if you look at its financial results over the past three or four years, that lending business is the thing that is driving most of the earnings growth of the company has generated. Mu FAS break through things, works great when you're building a tech platform, not so much when you're letting other people use your money.

Rick Munarriz: Yes, but not just the lending business, also the credit cards, it's putting a riskier price profile on Mercado Libre right now.

Tim Beyers: Yes, but I'd have to say that the e-commerce business, as great as that has been, it is still the core business for Mercado Libre, but you have to figure that that is a business where you're going to see a lot more competition. Mercado Libre hasn't faced a lot of competition yet. The growth has been unencumbered, but that competition is coming.

Jason Hall: End seen.

Rick Munarriz: I'll go next. Duolingo is a popular language learning platform that's taking the world by storm.

Tim Beyers: Yes, and it has some of the best unit economics I've ever seen. It's not uncommon to see $1 of sales and marketing expense produce $7 or more of new revenue.

Jason Hall: Yes, and the world is becoming smaller with more people traveling to places that speak different languages.

Rick Munarriz: Yes, and daily active users is growing faster than Daily monthly users, a sign of improving engagement.

Tim Beyers: Yes, and the AI threat that we all thought, well, maybe not all, but a lot of us thought would really hurt Duolingo, actually became a strength. They judo through it into their own AI that has been a material driver of growth over the last several quarters.

Jason Hall: Yes, and those of us who remember trying to use CD-ROMs in our laptops to learn languages are finding out that it's much easier to do it in a Cloud-based app ecosystem.

Rick Munarriz: Yes, but Google Translate. A recent update may have Duolingo in its crosshairs.

Tim Beyers: Yes, but in addition to that, you have all of the large language models doing language tutoring for people on demand, and that is a pretty interesting and possibly threatening substitute.

Jason Hall: Yes, but like health and fitness and weight loss and so many other categories, learning a foreign language often proves to be ethereal and a short-lived, exciting venture that doesn't prove to be sustainable.

Tim Beyers: End seen. Let me start us off. Let's talk about Warby Parker. Warby Parker is revolutionizing the market for developing and selling fashionable prescription eye-wear.

Jason Hall: Yes, and this is definitely an industry that is ripe for disruption with one giant player and not a lot else.

Rick Munarriz: Yes, and it's teaming up with Google to roll out its first entry in the AI-glasses market.

Tim Beyers: Yes, and this is a company that is doing an incredible amount of growth through traditional stores. Those stores are highly profitable with 35% four-wall EBITA margins.

Jason Hall: Yes, and it hardly operates in any market outside of North America right now.

Rick Munarriz: Yes, and its mix of e-commerce and small boutique stores help broaden its reach and crystallize the brand.

Tim Beyers: Yes, but Warby Parker is a very small player in a very big market. There's roughly 300 stores now in a market where there's somewhere on the order of 45,000 optical locations, including at some of your favorite big box discount stores.

Jason Hall: Yes, but the relationship so many of the people in the eye-wear profession have are pretty deep with the biggest player, and change management is the hardest thing to do if you're going to disrupt an industry.

Rick Munarriz: Yes, but it's still trading below the $40 reference price it hit the market at when it went public four years ago. End seen. Well done. Tim and Jason, thank you for indulging me today. Let's form an improv troop someday.

Let's do it. As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against. Don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards, and it's not approved by advertisers. Advertisers are sponsored content and provided for informational purposes only. See our full advertising disclosure. Please check out our show notes. For Tim Beyers, Jason Hall, and the entire Motley Fool Money team, I'm Rick Munarriz. May your days be sunny and your life Motley Fool Money.

Jason Hall has positions in CrowdStrike, MercadoLibre, and MongoDB. Rick Munarriz has positions in CrowdStrike and Duolingo. Tim Beyers has positions in Duolingo, MongoDB, and Warby Parker. The Motley Fool has positions in and recommends CrowdStrike, MercadoLibre, MongoDB, and SentinelOne. The Motley Fool recommends Duolingo and Warby Parker. The Motley Fool has a disclosure policy.