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Jim Cramer Says You Should Hold Salesforce Inc (NYSE:CRM)
We recently published a list of Jim Cramer’s Latest Portfolio: Top 10 Calls Before August. Since Salesforce Inc (NYSE:CRM) is number one on the list, it deserves a closer look.
Earlier this month, Jim Cramer spoke on his CNBC show about the importance of optimism now and explained why he sees hope for America in the future.
Cramer said the recent political violence has made things feel “dark” and “ominous.” The CNBC host said this election year has been a “mess, very much in sync with the tone of the country.”
However, Cramer referred to recent comments from the CEO of the world’s largest investment manager and said it appears the end of the world is “not on the table.” Cramer called the executive’s comments “a breath of fresh air” and agreed with the notion that the U.S. economy needs more growth and less business regulation. Cramer said America has a massive deficit problem but can’t tax its way out of it.
“But we can grow and get out of this situation.”
Cramer said we should understand that capitalism is a “force for good, a force for wealth creation, not just for the rich, but for everyone, as long as they invest.”
Jim Cramer encouraged his viewers to invest in individual stocks.
“It doesn’t matter what you invest in, as long as you invest.”
For this article, we watched Jim Cramer’s latest shows and picked 10 stocks that he talks about. With each stock, we mentioned hedge fund sentiment. Why are we interested in the stocks that hedge funds are piling into? The reason is simple: Our research has shown that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter strategy picks 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
Salesforce Inc (NYSE:CRM) is among Jim Cramer’s latest portfolio: Top 10 calls ahead of August?
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Salesforce Inc (NYSE:CRM)
Number of hedge fund investors: 154
Jim Cramer said on a recent show that Salesforce Inc (NYSE:CRM) is a “hold” here and that he would own the stock. Cramer said he sold some Salesforce shares when they were higher for his charitable trust.
According to data from Yahoo Finance, Salesforce Inc (NYSE:CRM) is expected to see earnings growth of around 16% on an annual basis over the next five years. The data also shows that the company is expected to deliver double-digit YoY EPS growth in the next ten of the eleven quarters.
While Salesforce Inc (NYSE:CRM) is primarily a customer relationship software company, with notable tools and platforms like Sales Cloud, Service Cloud, Marketing Cloud, Tableau, MuleSoft, and Slack, its most promising platform is Data Cloud when it comes to AI and software. The platform is growing 90% year-over-year and is expected to be worth $400 million in fiscal 2024. What does this platform do? It helps organizations process data from multiple departments and third-party cloud solutions. Powered by an AI-driven data engine, it analyzes metadata in real time to provide valuable insights, supporting sales, marketing, and customer service workflows.
The story continues
At the end of the first quarter, Salesforce Inc (NYSE:CRM) had $17.7 billion in cash and low financial leverage.
Mizuho Securities analyst Gregg Moskowitz thinks the company is still “well-situated” to help customers with digital transformation. However, the analyst thinks Salesforce Inc. (NYSE:CRM) would do so by prioritizing profitable growth. The analyst reiterated his Buy rating on the stock but cut his price target to $300 from $345.
Morgan Stanley analyst Keith Weiss, who has an Overweight rating and a $320 price target on Salesforce Inc. (NYSE:CRM), said Salesforce’s PEG ratio of 1.2 shows the market isn’t pricing in operational discipline and sustainability of earnings growth.
“We continue to view GenAI as a tailwind for Salesforce, with benefits likely arriving in calendar year 2025, but at these levels, GenAI represents a buy option.”
Polen Focus Growth Strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its Q2 2024 Investor Letter:
“Salesforce, Inc. “Salesforce.com Inc. (NYSE: CRM) fell nearly 20% due to a slowdown in revenue and bookings growth, part of a broader trend we’re seeing in enterprise software as companies defer spending on large projects due to the uncertain macroeconomic environment. As mentioned, there has been an emerging narrative of prioritized spending on AI, cloud and security over enterprise software spending, which could eventually hurt seat-based software in the long term. While there may be some near-term dollar shifts toward GenAI, we believe the mission-critical enterprise software market will remain robust going forward. We’ll monitor the situation closely, but we continue to believe Salesforce is well-positioned with its mission-critical software and high customer retention rates to weather these headwinds, leverage pricing power and effectively monetize generative AI across its product suite.”
Overall, Salesforce Inc (NYSE:CRM) ranks No. 1 on Insider Monkey’s list titled Jim Cramer’s Latest Portfolio: Top 10 Calls Before August. While we recognize the potential of Salesforce Inc (NYSE:CRM), our conviction lies in the belief that AI stocks have more promise to deliver higher returns, and do so in a shorter time frame. If you are looking for an AI stock that has more promise than CRM but is trading at less than 5 times earnings, check out our report on the cheapest AI stock.
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Disclosure: None. This article was originally published on Insider Monkey.