We recently published a list of Stocks On the Rise: 10 Best Stocks to Buy Right Now. In this article, we are going to take a look at where Okta, Inc. (NASDAQ:OKTA) stands against other best stocks to buy right now.
As per Merrill Lynch, 2025 has not shown much movement. Between the US tariffs and trade wars, geopolitical scenarios, and more, investors continue to be surrounded by attention-grabbing headlines. The firm believes that investors are required to stay focused on numerous key trends that continue to emerge beneath the surface, such as a rebound in the global economic activity, demonstrating signs of a manufacturing recovery. The US continues to be aided by a strong consumer and healthy labor market with double-digit US earnings growth and the unfolding of market rotation. Elsewhere, China has been making efforts to revive its business confidence and consumption. Also, certain parts of Europe have been experiencing expansion mode.
Consolidation in Sector Valuations
Merrill Lynch believes that robust business confidence has been overwhelming tariff and trade worries, with the global economy demonstrating signs of picking up steam instead of slowing down as the consensus has been expecting. This has resulted in the bull run in equities to spread out from the US into other countries that have started to outperform the US. Generally, a synchronized global acceleration remains positive for the earnings outlook and risk assets.
While the growth stocks have been experiencing a sell-off and value stocks continue to appreciate, Morningstar has seen its sector valuations consolidate towards fair value. For instance, the healthcare, real estate, and basic materials were the most undervalued sectors when the year kicked off, but each has now moved closer towards the fair value. Elsewhere, consumer cyclical was overvalued and has experienced a drop to fair value.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Amidst Uncertainties, What Should Be the Strategy?
Morningstar highlighted the current headlines which continue to weigh on investors’ sentiments. From the corporate earnings and guidance, to the tensions related to DeepSeek, including Trump’s tariffs news, there has been significant volatility in the broader markets. Morningstar believes that investors are required to focus on fundamentals, maintain a long-term mindset, and focus on valuations. As per the firm’s valuations, the rotation into value stocks possesses sufficient ability to run. Apart from attractiveness of the value stocks, the rotation into value is expected to yield healthy returns as the broader economy slows and earnings of growth stocks also witness the same momentum.
Our Methodology
To list the Stocks on the Rise: 10 Best Stocks to Buy Right Now, we used a screener to shortlist the stocks that have gained at least 30% YTD, and have a market cap of over $2 billion. We also mentioned the hedge fund sentiments around each stock, as of Q4 2024. Finally, the stocks were arranged in ascending order of their hedge fund sentiments.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A mobile application developer programming on a tablet, illustrating the power of the company’s adaptive multi-factor authentication.
Okta, Inc. (NASDAQ:OKTA)
% Gain on a YTD Basis: ~37.3%
Market cap as on March 6: ~$18.4 billion
Number of Hedge Fund Holders: 72
Okta, Inc. (NASDAQ:OKTA) sells solutions for identity and access management. Mizuho analyst Gregg Moskowitz upped the company’s stock to “Outperform” from “Neutral” with a price objective of $127, an increase from $110. The company released strong results for Q4 2024, with its current remaining performance obligations (cRPO) increasing 15% YoY. Notably, cRPO represents subscription backlog which is expected to be recognized over the upcoming 12 months. Mizuho opines that Okta, Inc. (NASDAQ:OKTA) is a clear leader in the critically important identity management market.
Also, the firm believes that the company will increasingly benefit from the group of newer products which have started to drive a meaningful contribution. Elsewhere, DA Davidson analyst Rudy Kessinger upped Okta, Inc. (NASDAQ:OKTA)’s stock to “Buy” from “Neutral” with a price objective of $125, up from $90. As per the firm, Okta, Inc. (NASDAQ:OKTA)’s sales productivity reached a multi-year high. Also, while newer products continue to contribute more meaningfully, enterprise and channel contribution are picking up.
Amidst evolving IT and security landscape, the companies continue to turn to Okta, Inc. (NASDAQ:OKTA) as their identity partner for its ability to deliver the broadest array of modern identity security with the flexibility to meet demands. White Brook Capital Partners, an investment management firm, released its Q4 2024 investor letter. Here is what the fund said:
“Okta, Inc. (NASDAQ:OKTA) was basically unchanged from where we bought it in 2024, although its had a good start to 2025. Okta’s products are used by customers and consumers to manage and secure identities. I believe we acquired shares at an attractive price and look forward to publishing a write up early this year.”
Overall, OKTA ranks 3rd on our list of best stocks to buy right now. While we acknowledge the potential of OKTA as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than OKTA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.