The market has thrashed investors lately, especially those in tech. The tech-heavy Nasdaq Composite Index hit all-time highs in November, then dropped precipitously over the next several months, only to bounce back a bit recently. Even though stocks seem to be trading all over the place, savvy investors know that buying stocks through any market conditions is a winning strategy.

Given that backdrop, we asked three longtime Fool.com contributors what stock they’ve bought recently. They bought or added positions in MongoDB ( MDB 0.91% ), Roku ( ROKU 7.19% ), and Okta ( OKTA 7.82% ). Let’s check out why.

Worried person sitting at kitchen table with laptop and papers strewn about.

Image source: Getty Images.

MongoDB: The database on steroids

Danny Vena (MongoDB): Once upon a time, the ability of the database to organize data into rows and columns was a revolutionary way to store, organize, and search information. Decades later, however, the standard structured query language (SQL) database is getting a bit long in the tooth.

These days, data is messy, and it’s impossible to squeeze everything into neat little columns and rows. That’s where MongoDB comes in. The company offers a full-featured, cloud-centric database that can store and arrange data of all types, including photos, video, social media posts, audio clips, and even full documents, while still providing the search abilities of its predecessor plus the aforementioned rows and columns.

MongoDB operates a freemium service that lets developers download and use the most basic version of its product, which has now been downloaded more than 240 million times since its introduction in 2009. Once developers experience the ease of using this modern database in the cloud, many sign up for the Atlas, MongoDB’s fully managed, database-as-a-service (DBaaS) product.

The company’s customer list includes many of technology’s most recognizable names, including Adobe, eBay, Alphabet, and Cisco, to name just a few. 

MongoDB’s popularity shows in its financial results. For fiscal 2021 (ended Jan. 31, 2022), revenue grew 48% year over year, increasing to 56% in the fourth quarter. Atlas continues to shine, with 85% growth in Q4, representing 58% of MongoDB’s total revenue and surpassing $1 billion in annualized revenue. 

Its rapidly increasing customer count is driving this robust performance. MongoDB added more than 2,000 customers in Q4, bringing the total customer count to 33,000, up 33% year over year. But even that doesn’t tell the whole story as the company’s most valuable clients are growing more quickly. 

Customers spending at least $100,000 in annual recurring revenue (ARR) increased 34%, while those spending $1 million or more jumped 67%. Additionally, the company’s net ARR expansion rate, which reflects increased spending by existing customers, stayed above 120%, a metric it has achieved each and every quarter going back more than 3 years. 

The digital transformation is ongoing, and data storage needs will continue to grow exponentially. The database software market topped out at $71 billion in 2020, and management estimates it will grow to $97 billion by 2023. MongoDB’s revenue grew to $874 million last year, helping illustrate the magnitude of the opportunity that remains. 

MongoDB was crushed by the recent downturn. When I bought the stock roughly two weeks ago, it was 45% off its recent high. Even after the drop, it isn’t cheap in terms of traditional valuation metrics, with a price-to-sales ratio of 32. That said, given its consistent above-average growth and massive total addressable market, it was a bargain I couldn’t pass up.

Person at home streaming video on big screen tv while sitting on couch with popcorn and remote.

Image source: Getty images.

Roku: The ad stock that I finally had to add

Will Healy (Roku): After long singing its praises, I finally got off the sofa and streamed some Roku stock into my portfolio.

The main reason is that I see Roku as the future of television — at least in North America. Streamers want a central operating system (OS) that aggregates streaming channels, while advertisers seek a platform to show television ads to an audience that has steadily abandoned broadcast and cable TV outlets.

Roku addresses both of these challenges through its Roku OS and low-cost streaming devices. Consequently, it claimed 60 million active accounts in Q4, a net increase of 9 million from year-ago levels. Also, Roku’s OS is now the No. 1 television ad platform in North America, according to Conviva.

Another reason I bought Roku is that it continues to dispel my doubts. When I first heard of Roku, I saw it as an equipment company with no competitive moat. However, it later leveraged its audience to launch an advertising business, giving it the competitive advantage that drives Roku today. I also doubted the strategy of abandoning its neutrality among channels and launching the Roku Channel. Nonetheless, the Roku Channel has become a top-five channel on the platform without detracting from its appeal, reinforcing the vision of Roku’s leadership.

Admittedly, some concerns remain on the international front. Popular channels such as Netflix and Disney‘s Disney+ have expanded across the world faster than Roku. This has created an opportunity for ad platforms created by Amazon, Samsung, and others. Still, expansions into Europe and South America could bring significant market share.

Investors have also worried that supply chain constraints and the end to pandemic lockdowns will slow Roku’s growth. Indeed, the company forecasts 35% revenue growth in 2022, down from 55% in 2021. Still, these headwinds should prove temporary, keeping Roku on a growth trajectory.

Additionally, investors can buy Roku at a massive discount, primarily due to these challenges. The current price is more than 70% below its 52-week high. Moreover, the price-to-sales ratio of seven is near a three-year low. These metrics and the company’s ad business made Roku an opportunity too compelling for me to miss.

Person covering their eyes in frustration as they try to remember their password.

Image source: Getty images.

Okta: The identity management specialist with a huge growth runway ahead

Brian Withers (Okta): Okta has been in the news lately but not for a reason investors are excited about. The company suffered a data breach and didn’t do a great job of communicating to customers and shareholders. Additionally, the company seemed to be late and lacking in its approach to handling the issue. 

I think the company will learn from this event, and management will take the necessary actions to be more responsive and responsible in the future. The stock has taken a hit, and despite everything, I think now is a great time to get in on this identity management leader. In fact, I recently added more to my personal portfolio. Let’s look at why.

The company is growing like crazy and winning with customers, but its recent acquisition of a key competitor, Auth0, is driving costs up. Revenue over the last two years has more than doubled, including the revenue from Auth0 in the most recent quarter. Customers are flocking to the platform and expanding their use of the critical infrastructure software. Customers spending more than $100,000 has more than doubled in the past two years. There are a whopping 197 customers that spend more than $1 million annually, which is up 137% over the past two years.

Metric

Q4 FY2020

Q4 FY2021

Q4 FY2022

YOY Change

2-Year Change

Revenue*

$167 million

$235 million

$383 million

63%

129%

Customers with >$100K annual contract value

1,467

1,950

3,100

59%

111%

Net loss

($50 million)

($76 million)

($241 million)

N/A

N/A

*Note: Q4 FY22 includes $56 million of revenue from the Auth0 acquisition. Source: Company earnings presentation, calculations by author. 

Despite all of the good news on the top line, the company is losing money at a faster rate. The company’s net loss of $241 million is 63% of revenue, meaning it spent 163% of all the money it took in. This is double the loss rate from the last two Q4 periods. This has spooked investors. The key reason for cost increases is related to its recent acquisition of a key competitor. Integrating two companies is hard, and it hasn’t even been a year since the acquisition closed last May. It’s likely this additional spending will temper over time as management works through the integration process. Given its $2.5 billion in cash and short-term investments, the company has plenty of fuel to continue to invest in growth and allow it to finish the integration work.

I’ve been an Okta user in two different companies. I can’t imagine going back to the old way of having to manage numerous individual log-in passwords versus Okta’s simple, single sign-on process. The situation is even worse for the information tech team trying to manage all-user access across a massive enterprise without a centralized platform to do so. As companies move their workloads to the cloud, Okta is becoming the critical front end to manage identity and access rights for large organizations.

Given the company’s long runway of growth ahead, I recently added to my position. If you join me in picking up some shares today, I imagine that five years from now, you’ll be looking back at this move as a smart one.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.





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