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JimVanMeerten (61.86)

Salesforce.com is on a roll

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May 26, 2011 – Comments (1) | RELATED TICKERS: CRM

One of the fastest rising S&P 500 stocks these days isSalesforce.com (CRM) which is up 8.75% in the last month vs the Value Line Index which is down 2.04% over the same period.  Its interesting that the trading symbol -- CRM -- is an mnemonic for what the company does Customer Relations Management.  I found it onBarchart based on its current momentum.

Salesforce.com (CRM) is the market and technology leader in on-demand business services. The company's Salesforce suite of on-demand CRM applications allows customers to manage and share all of their sales, support, marketing and partner information on-demand. The Salesforce Platform, the world's first on- demand platform, enables customers, developers and partners to build powerful new on-demand applications that extend beyond CRM to deliver the benefits of multi-tenancy and The Business Web across the enterprise. The Salesforce Platform allows applications to be easily shared, exchanged and installed with a few simple clicks via salesforce.com's AppExchange directory. Customers can also take advantage of Successforce, salesforce.com's world-class training, support, consulting and best practices offerings.

Factors to Consider:

Technical Factors:

1 - 100% Barchart short term technical buy signal

2 - Trend Spotter buy signal

3 - Above 20, 50 and 100 day moving average

4 - Only 3 new highs this month but up 8.75% vs the Value Line Index which is down 2.04%

5 - Relative Strength Index 69.91% and rising

6 - Trades around 150.93 with a 50 day moving average of 133.64

Fundamental Factors:

1 - Very popular with the Wall Street brokerage analysts with 11 strong buy, 16 buy and 11 hold recommendations based on very aggressive sales and earnings forecasts

2 - Sales are projected to increase by 31.30% this year and another 23.20% next year

3 - Earnings are estimated to increase by 7.30% this year but a whooping 42.70% next year followed by 26.56% annually for the next 5 years

4 - The company has been burning through its cash for acquisitions lately

General Investor Sentiment:

1 - As measured on Motley Fool there is a difference of opinion between the professional and individual investor.  2,182 readers of Fool express an opinion on this one

2 - CAPS members are split with vote 870 to 779 that the stock will beat the market

3 - The more experienced All Stars seem equally split with a 279 to 254 vote for the same result

Summary: Professional analysts like Salesforece.com (CRM) but the individual investor is not impressed.  Short interests have been building steadily over the past 4 month not in the number of shorts but in the number of days to cover.  The stock's recent price jump will give caution to the short sellers and if it continues those shares will have to be covered.  I like the sales and earnings growth prospects but I'm cautious because of the difference of opinion with the individual investors and short sellers seeing something the professional analysts don't.  If you buy stay protected with either a stop loss or put.

1 Comments – Post Your Own

#1) On May 26, 2011 at 9:51 PM, buffalonate (94.15) wrote:

I would stay far away from that one.  It is growing revenues at 30% but it isn't very profitable.  It has a p/e ratio of over 300 which means stay far away.  This is a cult stock which makes the analysts' panties moist and they completely forget how to value a company. They will have egg on their faces before long.  I wouldn't buy this stock if it was half of its current price.   

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