Stock (Symbol) |
Salesforce.com (CRM) |
Stock Price |
$71 |
Sector |
| Technology |
Data is as of |
| December 10, 2016 |
Expected to Report |
| Feb 22 – 27 |
Company Description |
 Salesforce.com, inc. is a provider of enterprise cloud computing solutions that include apps and platform services, as well as professional services. The Company focuses on customer relationship management (CRM). The Company offers six core cloud services that include sales force automation, customer service and support, marketing automation, community management, analytics and a cloud platform for building custom applications. The Company offers consulting, deployment, training, implementation and integration services to its customers to facilitate the adoption of its cloud solutions. The Company delivers its solutions as a service through all the Internet browsers and on mobile devices, on a subscription basis, primarily through its direct sales efforts and indirectly through partners. Source: Thomson Financial |
Sharek’s Take |
 Salesforce.com (CRM) has some of the best software available, and that’s why its P/E is always so high. Salesforce is the world’s leader in customer relationship management (CRM) software and connects more than 150,000 clients to their customers via the internet and stores this customer information in the cloud. Salesforce is state of the art and in my opinion head-and-shoulders above its competitors. I attended a salesforce conference at the Javits Center in New York City yesterday. The place was swarming with clients and potential customers. Not only does Salesforce tackle things like having your clients in a program that has details of when you spoke last and when you need to call them next, it goes way beyond that to address issues like working with a team on projects, or in my instance how much money a client has under management with you and how has the ballance grown (or declined) over time. And all the data is stored at Salesforce (the cloud). This company — and the stock — es exceptional. Just look at the ten-year chart. But everyone knows this, and that’s why the median annual P/E has been 78 or higher the last ten years. It was 72 just last qtr! But now after a back-and-forth year CRM has a P/E of just 56 (on 2017 profit estimates). I will purchase the stock for the Growth Portfolio and Aggressive Growth Portfolio today. |
One Year Chart |
 Last qtr Salesforce had 25% sales growth and 14% profit growth. Profit growth wasn’t great due to a big qtr in the year-ago period. Still, the company beat estimates of 0% growth. Afterwards, Annual Profit Estimates and qtrly estimates didn’t go up much (if at all). Looking ahead, analysts predict 32%, 21%, 29% and 38% profit growth the next 4 qtrs. Nice Est. LTG of 30% per year. |
Fair Value |
 My Fair Value is 73x earnings, which is where the P/E stands right now when looking at 2016 profits. That equates to excellent upside potential in 2017 and 2018. But, the P/E is surely bound to fall someday as growth slows (or is expected to slow) so that’s the risk here. But I’ve been worried about for years and have missed out on a run from the $30s to the $70s. |
Bottom Line |
 Salesforce.com has been one of the worlds best growth stocks for a decade now, and its a shame I’ve never owned it. Looking at the ten-year chart its easy to see the trick with this stock is to buy it on a dip, and that’s what I’m doing today. My goal was to get this stock in the low-$70s and today it is $70. I will add CRM to the Growth Portfolio and Aggressive Growth Portfolio where it will rank 7th in the Power Rankings. Stamps.com (STMP) will be removed from the Aggressive Growth Portfolio to create cash. |
Power Rankings |
Growth Stock Portfolio
7 of 35Aggressive Growth Portfolio 7 of 18Conservative Stock Portfolio N/A |
