Tech Sell-Off: 2 Growth Stocks Down 62% (or More) to Buy Right Now | The Motley Fool


The S&P 500 Information Technology index has fallen 21% from its high, which puts the sector into bear market territory. Even so, the index has generated a 150% return over the past five years, easily outpacing the 70% return of the S&P 500. But that trend is nothing new. The tech sector has outperformed the broader market over the past one, two, and three decades as well.

That data makes a compelling case for holding at least a few tech stocks in your portfolio, and since the share prices of many high-quality businesses have fallen sharply in recent months, this looks like a good time to put some money into some of them.

Here are two high-growth tech stocks worth buying right now.

Image source: Getty Images.

1. Okta

Okta (OKTA 2.46%) is a leader in the cybersecurity industry. Specifically, the company specializes in identity and access management. Its platform ensures that only the right people can access specific applications and infrastructure. Okta allows administrators to authenticate users based on details like identity, device, and behavior, and it leans on artificial intelligence (AI) to score the risk associated with each sign-in.

The company has distinguished itself in several important ways. 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 pre-built integrations, which makes deployment quick and easy for clients. Research company Gartner has recognized Okta as an industry leader in cybersecurity for five consecutive years.

Not surprisingly, it’s growing quickly. In the past year, Okta grew its customer base by 123% to 15,800, and as of the end of its most recently reported quarter, its average established customer was spending 23% more with the company than they were a year prior, implying a successful land-and-expand growth strategy. In turn, revenue rose 62% to $1.5 billion. And while cash from operations fell 54% to $67 million, Okta still has $2.5 billion in cash and equivalents on its balance sheet, which means the company can afford to invest aggressively in growth.

On that note, shareholders have good reason to be bullish. Management estimates its market opportunity to be $80 billion — $50 billion for workforce identity solutions and $30 billion for customer identity solutions — and Okta has established itself as an industry leader. To that end, 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.

Okta is now down by 67% from its peak and trading at 9.9 times sales, which is much cheaper than its five-year average of 24.8 times sales. That gives investors an opportunity to buy this growth stock at a bargain price.

2. Docebo

Each year, millions of people quit their jobs, and turnover-related expenses for U.S. businesses total about $1 trillion. However, studies have shown that ongoing training can both reduce employee turnover and boost productivity. In fact, a survey from LinkedIn Learning suggests that 94% of employees would stay with a company longer if it invested in their career development. That’s where Docebo (DCBO -0.62%) can make a difference.

Its software platform helps clients create, deliver, and measure the impact of learning content. Clients can access a wealth of ready-made courses, or they can use Docebo Shape — an AI-powered content-creation engine — to convert corporate resources into custom training material. Docebo adjusts content automatically to personalize the experience for each person, and it can inject training content into people’s normal workflow, allowing employees to learn while they do their jobs.

Fosway Group recently named Docebo an industry leader for the fifth consecutive year, and the company has won big customers like Amazon Web Services and Samsung. In fact, it ended the most recent quarter with over 2,900 customers, up 26% from a year earlier. In turn, revenue rose by 61% to $115 million, and while the company generated negative free cash flow of $4 million, it has $212 million in cash and equivalents on its balance sheet. In other words, Docebo can afford to invest aggressively in grabbing market share.

The global corporate e-learning market will reach an annual value of $38 billion by 2026, according to Reports Monitor, meaning Docebo has thus far captured only a tiny fraction of its addressable market. But as an established industry leader, it’s well positioned to grow as more enterprises recognize the value in offering their employees ongoing learning opportunities.

Docebo’s share price sits 63% off its all-time high, and it trades at a reasonable 9.8 times sales. That’s why now looks like a good time to buy this growth stock.





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