2022 was a rough year for tech stocks. After rallying through much of the pandemic, fears of rising and falling interest rates have slowed the tech sector this year, particularly among high-value growth stocks.
Although a bear market dampens investor morale, it is no excuse to stay away from the sector. Indeed, bear markets often provide excellent opportunities to buy beaten-down growth stocks, as many are undervalued based on temporary headwinds. Coming out of the Great Recession, several growth stocks have delivered multi-baggage returns, and this selloff could provide another opportunity to grab some top stocks on the cheap. Keep reading for two tech stocks that could do just that.
Octa (OKTA -5.64%) After its latest earnings report, stocks took a tumble. The company said it had challenges integrating Auth0, a customer identification software company it acquired last year. It returned to its long-term guidance of $4 billion in annual revenue by January 2026.
Despite those setbacks, Okta remains a leader in cloud identity software, providing tools that enable employees and customers to seamlessly and securely sign in and stay connected. Okta has a competitive market value of $80 billion; Currently, its annual revenue is less than $2 billion.
The company It has shown remarkably consistent revenue growth even during the pandemic, increasing revenue by 37% or more every quarter since its initial public offering (IPO) in 2017. Although the stock fell in its second quarter report, earnings rose 43%. %, and the company raised its guidance for the year.
Okta’s stock is now down about 80% from last year’s peak, and the stock trades at a price-to-sales ratio of more than six, making it cheaper than it used to be by this measure. The company must recover from its recent slump by hiring new salespeople to replace those it lost following the merger. In addition, it adjusted its go-to-market strategy to help customers and its sales force understand which customer identity product — Okta or Auth0 — is best for them. If those changes have the desired impact, Okta’s stock should rebound in no time.
2. Axon Enterprise
Axon Enterprise (Axon -1.52%) It doesn’t fit the standard definition of a tech company. The company makes technology tools and software for law enforcement agencies, including TASER electric stun guns, body cameras and cloud software to help agencies manage things like records and evidence.
The products reinforce each other, which makes it a unique company that basically has no direct competition in the collection of hardware and software products. Taser, the brand name, is synonymous with the flintlock gun, indicating its dominance in that market. And Axon is a leader in the growing body and dashboard camera market at a time when evidence of police crime is growing thanks to smartphone cameras.
Because of that market leadership, Axon has consistently delivered strong growth and strong profits. In the most recent quarter, revenue rose 31 percent to $286 million — led by TASER and body and dashboard cameras — and revenue from new software-as-a-service products nearly tripled, showing that investments in software are paying off. . Adjusted net income for the quarter rose 16 percent to $31.8 million, and the company raised its full-year revenue guidance by 27 percent to $1.07 billion-$1.12 billion.
With a leading market position, a history of innovation, and new products like drone software, virtual reality training tools, and license plate recognition technology, Axon stock should continue its long-term track record of superior performance.
Jeremy Bowman has held positions at Axon Enterprise and Okta. He has positions in the Motley Fool and recommends Axon Enterprise and Okta. The Motley Fool has a disclosure policy.