Cybersecurity company Okta shares price is attractive

Okta (Nasdaq: OKTA) is a leader in the cybersecurity industry, specializing in identity and access management. Its platform ensures that only authorized people can access specific applications and infrastructure.

Unlike Microsoft, Okta is technology neutral. It doesn’t own any cloud infrastructure, and it has no reason to show bias toward any particular vendor. In fact, Okta offers more than 7,000 prebuilt integrations, making deployment quick and easy for clients. Research company Gartner has recognized Okta as an industry leader in access management for five consecutive years.

Not surprisingly, it’s growing quickly. In its last quarter, Okta’s revenue grew by 65% over the past year, with established customers spending 23% more on average with the company than they were a year prior. Okta recently had $2.3 billion in cash and equivalents on its balance sheet, meaning that the company can afford to invest aggressively in growth.

Shareholders have good reason to be bullish. Management estimates its market opportunity to be $80 billion, and Okta has established itself as an industry leader. The company should benefit as more enterprises shift more of their digital operations to the cloud, adopt remote work models and prioritize zero-trust security.

With Okta shares recently down more than 65% from their 52-week high, long-term investors might want to take a closer look. (The Motley Fool owns shares of and has recommended Okta.)

Ask the Fool

Q. How should I learn about an industry to invest in it? – P.L., Las Cruces, New Mexico

A. The best way to learn about any industry is to read a lot about it – though don’t expect to understand all of what you’re reading at first.

Just stick with it. Note that some industries (such as consumer products and retail) can be fairly easy to understand, but others (such as biotechnology, semiconductors and financial services) can be quite complex.

Perhaps start with websites of companies in the industry and trade associations.

Read books on the industry or companies in it. There are gobs of online articles to digest, too, from sites such as Fool.com.

You can get research reports from many brokerages on lots of companies, prepared by Wall Street professionals. Read annual reports of companies in the industry, which include comprehensive 10-K reports.

Ideally, learn some accounting basics, too, so that you can make sense of companies’ financial statements.

Q. I’m invested in a mutual fund with a 4.75% front-end load. Should I sell out of it and move that money to a no-load fund? – D.R., Kenosha, Wisconsin

A. No-load funds – of which there are thousands – are generally preferable to funds with loads (sales charges).

In this case, though, you already paid that fee up front when you bought your shares.

So at this point, forget the load and simply decide whether you want to keep the fund based on your performance expectations for it.

However, do check out its expense ratio (annual fee). Many good funds charge less than 1%, and some index funds are charging less than 0.10%.

There are plenty of outstanding no-load funds.

My dumbest investment

My dumbest investment? I lost money on Tesla, a stock that has gone from a split-adjusted $3 per share in 2010 to more than $700 recently.

When I opened an account so I could invest in stocks, I bought three shares of Tesla and two shares of Amazon.com.

I sold Tesla in 2018, when the company was burning through cash quickly and its CEO, Elon Musk, suggested on Twitter that he could take the company private.

The stock dropped after that, and the Securities and Exchange Commission charged him with securities fraud.

He and Tesla each ended up paying a $20 million penalty for his actions. Emotionally speaking, I couldn’t take his reckless comments anymore. – B.C., online

The Fool responds: You might think of this as your dumbest investment, but it could also be considered one of your smartest.

Yes, Tesla’s stock is up roughly tenfold since you sold, but you sold because you didn’t have faith in the company’s management – and that’s an excellent reason to sell.

Musk is still heading the company, and he has a reputation for rather unpredictable behavior.

Some reasonably question whether he’s able to spend sufficient time leading Tesla when he’s also involved in many other ventures, such as pursuing (and then rejecting and then being sued about rejecting) Twitter.

Others, of course, do believe in his leadership and expect more growth from Tesla.

Comments are closed.