salesforce.com, inc. (NYSE:CRM)

Another SaaS play in tumultuous times. With companies cutting capital expenditures they will increasingly seek to partner with best of breed solutions that provide a pay as you go solution as opposed to huge up front licensing and implementation costs.

Salesforce.com undoubtedly makes good products and understands SaaS better than their bigger competitors (SAP and Oracle), but I just don't get the valuation. With a P/E of around 90, they better grow, and grow fast, but in the current macroeconomic conditions, I simply don't see them tripling their EPS within a short period. They might be building a good platform with "cloud computing" (great buzzword, that. It's been known for ages in the software field as "distributed computing" but the "cloud" sounds so much more Web 2.0), but their underlying value still is not worth the price.

it is involved in cloud computing, the customer pays as he goes, instead of longterm license like MSFT

Are you serious? 87 P/E ratio in today's economy? An easily duplicated and delivered technology at this kind of premium is pure speculative folly. Even doubling every year makes it years before the P/E will be in line, and by then they will be completely diluted with competition. Juggernaut Microsoft is on their tail! And if you don't think Microsoft can be a danger look at Playstation. X-box killed it. That shows you Microsoft is capable when they need to be. KISS YOUR MONEY GOOD-BYE and put me on the put options express!

software as a service, long term high growth potential

even at $30 the stock is still priced for perfection with crazy multiples. The Market crash has added a great deal of prudence to investors and the recesiion will make sustain historic growthe very diffult for the company.

salesforce.com is a great company. It is very well managed and well-respected in its field. The opportunity for growth is impressive. A newcomer, it is already making the likes of Larry Ellison a bit nervous.

That said, the current valuation is ridiculous. The market trades at an average P/E of about 16 and yields just under 10% annual returns over time. CRM's current multiple over 117 suggests the market expects annualized returns in the range of 70%!

Full disclosure: I'm a total amateur. Please tell me if I'm not making any sense here. Always do your own research before investing.

A solid company whose P/E ratio is too high for an economy headed for a recession.

SaaS just makes sense. Cash cow.

Why? The future of software. Amazing growth, still a lot of growth possible. Large expanding customer base. Network effect.

www.indexfund.nl

What the heck, huge drop, it must be an overreaction. Well, maybe not given the slow-down and the huge P/E.

However, I think there is a good chance that product line expansion, movement into bigger accounts, and overall infrastructure play will take it to the next level, but that these efforts take time as they are complex shifts from its an initial run.

But they truly have no SaaS peer today for what they are today, and first-mover advantage is worth a lot in Silicon Valley in a space that will shift software as much as SaaS will.

RSI 14 - 30

RSI 5 - 20

Oversold

Way oversold after earnings release. CRM has been delivering monster top line growth rates since its inception. I've been following this company since it's Series B financing round when it was a private company.

Top 20 Covered Call Trades

Terribly overpriced; particularly given the low profitability (traditional mistake of loving growth at any price). Moreover, the sales are approaching $1B, which is a level that will be very difficult to grow at the same rates as the past. However, the significant upward momentum may keep rational investing from entering the picture for up to 1-2 years. Regardless, this will fall sooner or later.Stagflation and the $8 BILLION market cap will weigh heavy. Investor hope and faith will start to wear thin given it has been almost 8 yrs with little to show.

The rise of cloud computing will put Salesforce way out infront of competitors as they surge into the future. Expect this stock to double in the next 6 to 12 months as the cloud computing frenzy grows.

This has been on a nice run, and it might have a bit more upside. However, I'm going with the Spectacled Bear on this one, so I feel confident.

Their product is simple to use and flexible. They seem to be succeeding at selling to major corporations. Once they get a foot in the door their products tend to spread and stick around for a long time. Expenses will stabilize as the product matures and the profits will keep rolling in.

I simply used the screener to identify 1-star companies with the highest 52-week gain. The 1-star rating should mean they are bad companies and the 52-week gain should mean they are overpriced. We’ll see how it works!