DigitalOcean Holdings, Inc. (NYSE:DOCN), is not the largest company out there, but it received a lot of attention from a substantial price increase on the NYSE over the last few months. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock's share price. However, what if the stock is still a bargain? Let's take a look at DigitalOcean Holdings's outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for DigitalOcean Holdings

Is DigitalOcean Holdings Still Cheap?

The stock seems fairly valued at the moment according to our valuation model. It's trading around 18.64% above our intrinsic value, which means if you buy DigitalOcean Holdings today, you'd be paying a relatively reasonable price for it. And if you believe that the stock is really worth $28.87, then there isn't really any room for the share price grow beyond what it's currently trading. So, is there another chance to buy low in the future? Given that DigitalOcean Holdings's share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of DigitalOcean Holdings look like?

Future outlook is an important aspect when you're looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it's the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With revenues expected to grow by 48% over the next couple of years, the future seems bright for DigitalOcean Holdings. If the level of expenses is able to be maintained, it looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has already priced in DOCN's positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven't considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you've been keeping tabs on DOCN, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it's worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into DigitalOcean Holdings, you'd also look into what risks it is currently facing. Case in point: We've spotted 2 warning signs for DigitalOcean Holdings you should be mindful of and 1 of these is a bit unpleasant.

If you are no longer interested in DigitalOcean Holdings, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.