salesforce.com, inc. (NYSE:CRM)

funkywizard (32.82) Submitted: 1/30/2009 12:45:57 PM : Start Price: $26.00 CRM Score: -73.02

Although I'm not aware of any issues on the demand side for their service, I feel their current valuation is unsustainable. With institutions and individuals alike pulling out of the market in order to meet current cash requirements, I think it won't take much for people to decide a PE of 50-90 is overpriced and get out before others realize the same. With the mantra of permanent growth being the justification for such PE's in the past, it will only take a couple quarters of little to no growth in the overall economy before a change in growth expectations brings stock PE's into the high single digits on average. Will this stock drop in the next year or two? I certainly expect so. If the general economy suffers, this stock may simply track the broader indexes on the down side. But if commodities and other hard-hit industries turn around without seeing a broader rally in the market, I would think money that's been put into stocks like this will get reallocated to those cyclical industries.