Salesforce Stock: Join the Rally at a 38% Discount

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 stock is now 38% 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 recently secured a $5.6 billion U.S. Army contract, boosting its backlog for AI-driven data solutions. For fiscal year 2025, operating cash flow increased 28% year-over-year, and fiscal year 2026 guidance projects further operating cash flow growth of 10-11%. Initiatives like Agentforce, a comprehensive AI system, and a 2025 average price increase of 6% reinforce its capacity to derive value from an expanded, AI-centric platform. This focus on higher-value solutions and efficient customer engagement drives sustained cash generation.

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 5.4, CRM stock is available at a 38% 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. T-Mobile US (TMUS)
3. Abbott Laboratories (ABT)

Notably, a portfolio that was built starting 12/31/2016 with stocks that fulfill 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%

Stock Picking Falls Short Against Multi Asset Portfolios

Individual picks are volatile but diversified assets offset each other. A multi asset portfolio helps you stay the course capture upside and reduce downside.

The asset allocation framework of Trefis’ Boston-based, wealth management partner yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Our partner’ strategy now includes Trefis High Quality Portfolio, which 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