Salesforce Stock Pullback: A Chance to Ride the Uptrend

Salesforce (CRM) stock might be a good buy now. Why? Because you get high margins – reflective of pricing power and cash generation capacity – for a discounted price. Companies like this generate consistent, predictable profits and cash flows, which reduce risk and allow capital to be reinvested. The market tends to reward that.

What Is Happening With CRM

CRM may be down -20% so far this year, but the silver lining is that it is now 27% cheaper based on its P/S (Price-to-Sales) ratio compared to 1 year ago.

The stock may not reflect it yet, but here is what’s going well for the company: Salesforce’s new Agentforce and Data 360 AI products are driving significant adoption, with ARR growing 114% to nearly $1.4 billion in Q3 FY26, driven by existing customer expansion. This, coupled with an average 6% price increase across Enterprise and Unlimited editions starting August 1, 2025, underscores robust pricing power. The current remaining performance obligation of $29.4 billion, up 11%, signals strong future revenue and cash generation. Salesforce raised its FY26 revenue guidance to $41.45-$41.55 billion.

CRM Has Strong Fundamentals

• Recent Profitability: Nearly 33.5% operating cash flow margin and 22.0% operating margin LTM.
• Long-Term Profitability: About 31.8% operating cash flow margin and 19.2% operating margin last 3-year average.
• Revenue Growth: Salesforce saw growth of 8.4% LTM and 10.0% last 3-year average, but this is not a growth story
• Available At Discount: At P/S multiple of 6.2, CRM stock is available at a 27% discount vs 1 year ago.

Below is a quick comparison of CRM fundamentals with S&P medians.

*LTM: Last Twelve Months

Don’t Expect A Slam Dunk, Though

While CRM stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. Salesforce (CRM) took some pretty big hits during market turmoil. It fell about 70% in the Global Financial Crisis and dropped nearly 59% in the inflation shock. Even during less severe sell-offs, like the 2018 correction and the Covid pandemic, it still declined over 24% and 35% respectively. The stock’s strong fundamentals don’t make it immune when volatility spikes—drawdowns like these show that risk is very real, even for well-regarded companies. But the risk is not limited to major market crashes. Stocks fall even when markets are good – 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.

If you want more details, read Buy or Sell CRM Stock.

How We Arrived At CRM Stock

CRM piqued our interest because it meets the following criteria:

1. Greater than $10 Bil in market cap
2. High CFO (cash flow from operations) margins or operating margins
3. Meaningfully declined in valuation over the past 1 year

But if CRM doesn’t look good enough to you, here are other stocks that also check all these boxes:

1. Visa (V)
2. Adobe (ADBE)
3. Comcast (CMCSA)

Notably, a portfolio that was built starting 12/31/2016 with stocks that fulfil the criteria above would have performed as follows:

• Average 12-month forward returns of nearly 19%
• 12-month win rate (percentage of picks returning positive) of about 72%

Portfolios Win When Stock Picks Fall Short

Stocks soar and sink – the key is staying invested. A balanced portfolio keeps you in the market, boosts gains and reduces single stock risk

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.