CRM Pulls Back to Support. Smart Time to Enter?
Salesforce (CRM) should be on your watchlist. Here is why – it is currently trading in the support zone ($232.84 – $257.36), levels from which it has bounced meaningfully before. In the last 10 years, the stock received buying interest at this level 5 times and subsequently went on to generate 24.2% in average peak returns.
| Peak Return | Days to Peak Return | |
|---|---|---|
| 5/28/2021 | 7.6% | 84 |
| 8/20/2021 | 21.0% | 80 |
| 11/30/2023 | 25.8% | 92 |
| 5/31/2024 | 12.3% | 35 |
| 8/6/2024 | 54.5% | 120 |
But is the price action enough alone? It certainly helps if the fundamentals check out. For CRM Read Buy or Sell CRM Stock to see how convincing this buy opportunity might be.
Here are some quick data points:
- Revenue Growth: 8.3% LTM and 10.5% last 3 year average.
- Cash Generation: Nearly 31.6% free cash flow margin and 21.2% operating margin LTM.
- Recent Revenue Shocks: The minimum annual revenue growth in last 3 years for CRM was 8.0%.
- Valuation: CRM trades at a PE multiple of 35.2
- Opportunity vs S&P: Compared to S&P, you get higher valuation, higher revenue growth, and better LTM free cash flow and operating margins
Salesforce provides customer relationship management technology and a platform that enables connected experiences across industries like financial services, healthcare, and manufacturing worldwide.
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- Better Value & Growth: ORCL, CRM Lead Synopsys Stock
| CRM | S&P Median | |
|---|---|---|
| Sector | Information Technology | – |
| Industry | Application Software | – |
| PE Ratio | 35.2 | 23.8 |
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| LTM* Revenue Growth | 8.3% | 5.1% |
| 3Y Average Annual Revenue Growth | 10.5% | 5.3% |
| Min Annual Revenue Growth Last 3Y | 8.0% | -0.1% |
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| LTM* Operating Margin | 21.2% | 18.6% |
| 3Y Average Operating Margin | 17.8% | 17.8% |
| LTM* Free Cash Flow Margin | 31.6% | 13.3% |
*LTM: Last Twelve Months
That is one way to look at stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure
What Is Stock-Specific Risk If The Market Crashes?
Salesforce isn’t immune to big drops either. During the Global Financial Crisis, it fell about 70%. The Inflation Shock hit it with nearly a 59% loss. Even the Covid selloff and 2018 correction weren’t small—they saw dips of roughly 36% and 25%, respectively. So, while Salesforce has strong fundamentals, history shows significant declines can still happen when the market turns sour.
But the risk is not limited to major market crashes. Stocks fall even when markets are in good shape – think events like earnings, business updates, outlook changes. Read CRM Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.