Stock Review of the Day
Stock:  CRM (Salesforce)
Summary:  ON SALE

Score:  16/20
MOS:  88%
Share Price:  $252
Sticker Price:  $2,197

Is CRM (Salesforce) a good investment?

CRM is the largest and most well known cloud based CRM (Customer Relations Management) software company in the world.  They were founded in 1999 and are based out of San Francisco, CA.  

A CRM platform allows companies to track past and present customers as well as prospects.  You can monitor where they are at in the customer or prospect journey, what their browsing/buying behavior is, and who last contacted them.  Large enterprise corporations can have thousands of prospects and customers and without a CRM, a large corporation would be running blind.  Overall, a CRM is essential for most businesses.

Salesforce is classified as an enterprise SaaS.  I can’t stress how important enterprise SaaS is.  Enterprise means they serve large corporations.  SaaS is Software as a Services which is a monthly or annual recurring revenue model.  When it comes to enterprise SaaS, large corporations typically sign contracts that extend over years.  Usually between 3 – 10 years.  The annual cost can range between hundreds of thousands on up to millions of dollars per year for just one corporate customer.  Overall, enterprise SaaS is highly profitable and scalable.  

What makes Salesforce really powerful is it’s ability to integrate with other software applications via API (Application Programming Interface).  In layman terms, an API allows data to flow from one software to another.  In other words, they talk to each other.  This is important because companies will run on other large software platforms such as SAP and Oracle.  When a company wants to buy new software to run operations, they typically won’t replace all IT infrastructure, they just want to upgrade a function of the business such as sales.  Overall, Salesforce “plays nice” with other software companies which makes it easier for businesses to scale.

This next point is worth mentioning but it shouldn’t make a big impact on our investment decision.  Yesterday, Salesforce announced they are creating a $100M fund which they’ll use to invest in socially positive business models.  These business models engage in environmental sustainability, social justice, and alternative energy.  “Impact Investing” or “ESG (Environmental, Social, and Governance) Investing” can pull on the heart strings of emotional investors which is fine.  In some cases I would use the word cute (I’m being sarcastic here) but on the flip side of that sarcasm is ACTIONS speak louder than WORDS.  If Salesforce truly invests in a business that is impacting, let’s say, the environment positively, then I can get behind this mission.

So to answer the question is CRM a good investment?  The answer is YES.  CRM is on the TOP 50 ON SALE within TYKR.  With a score of 16/20, the financials are very strong.  With a MOS of 88% (share price of $252 vs a sticker price of $2,197), this stock has a lot of room to grow.

What do you think?

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All stock reviews are for entertainment purposes only. Reviews are not financial advice.

Blog Post Author
Sean Tepper