Motley Fool: Okta shareholders have good reasons to be bullish

The Motley Fool Take

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

From P.L. in Las Cruces, N.M.: How should I learn about an industry to invest in it?

The Fool responds: 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.

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. 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.

From D.R. in Kenosha, Wis.: 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?

The Fool responds: 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. But 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.

The Fool’s School

Whether you’re approaching retirement or are just thinking about and planning for it, here are some things you should know:

Withdrawal strategies: You’ll need a plan for how much you’ll withdraw from your nest egg each year in order to make it last. If the market and your portfolio’s value sink just before you retire, consider delaying retirement, or withdraw a smaller amount. Try to keep several years’ worth of living expenses in cash or low-volatility, accessible accounts to tap during bear markets or recessions.

RMDs: Once you turn 72, you’ll need to start taking required minimum distributions from certain retirement accounts, such as traditional (non-Roth) IRAs. Fail to do so, and the penalty is huge — 50% of the sum you failed to withdraw on time. (These withdrawals will generally count as taxable income.)

Health care: Prepare to pay a lot to health care providers. Fidelity Investments has estimated that the average 65-year-old opposite-gender couple retiring in 2022 will spend $315,000 on medical expenses throughout their retirements (excluding long-term care, most dental care and over-the-counter drugs). Getting and staying as healthy as possible might keep those expenses down for you.

Other expenses: While you might spend a lot on health care, you’ll likely spend less on many other items as you slow down, such as commuting, clothing and even travel. Your housing costs may drop, too, if your mortgage is paid off or if you move to a smaller home or lower-cost location.

Daily life: Having big swaths of free time may sound enticing, but many find themselves restless or even depressed in retirement. Prepare to combat that by staying active, learning new things, engaging in activities you enjoy and socializing. Exercising regularly, volunteering or working a low-stress job can also help.

A bigger standard deduction: One nice thing about getting older is that those 65 or older get a bigger standard deduction come tax time.

Learn more about retirement at Fool.com and elsewhere, and enter it prepared.

My Dumbest Investment

From B.C., online: 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.

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.

Who am I?

I trace my roots back to around 1950, when a guy who worked for an accounting company created an electronic counting machine called the “Glickiac.” I took on the name of Andersen Consulting in 1988, but in 2001 changed it to my current name, which emphasizes a focus on the days ahead. Today I’m a major management consulting and technology services company, with a market value recently topping $180 billion and around 8,200 patents or patents pending. Headquartered in Dublin, I have offices in some 200 cities in 50 countries and employ around 710,000 people worldwide. Who am I?

Can’t remember last week’s question? Find it here.

Last week’s trivia answer: Roku

Leave a Reply

Your email address will not be published. Required fields are marked *