How CRM gets to $300


The entire concept of the cloud as an industry has been around for more than a decade, but it’s only now that the tectonic plates of technology are aligned for the Cloud Revolution to take off. As ubiquitous broadband becomes a reality, as the cost of data storage has continued to plummet for decades now and as processing powers in smartphones, tablets and car dashboards surpass what the best PCs could do just five years ago, we’re all moving toward consuming, storing and accessing our information, entertainment and work in the cloud.
The Cloud is going to be one of the biggest growth industries in the history of business. And in our new book, “30 Stocks for the Cloud Revolution”, we’ve identified the 30 companies best positioned to benefit from this huge new tech sector.
And here’s part of my Salesforce.com analysis from the new eBook, 30 Stocks for the Cloud Revolution:
Company:  CRM – Salesforce.com, Inc.
Summary:                   Salesforce.com provides customer and collaboration relationship management (CRM) services to businesses worldwide. They also provide a platform for developers to build and run applications.
Balance Sheet
Cash and Cash Equivalents:                 424 M
Short Term Investments:                          72 M
Long term Investments:                           910 M
Total Cash:                                                1.4 B
Total Debt:                                                498 M
Net Cash:                                                 902 M
Outstanding Shares:                               132 M
Net Cash / Share:                                    6.8
Share Price:                                              138
Enterprise Value / Share:                      121
Total Market Cap:                                     18 B
Enterprise Value:                                   17.1 B
2012 Sales Growth:                                  27.3%
2012 Earnings Estimate:                         1.27
Enterprise Value Multiple:             95 Times Forward Earnings
Dividend & Yield:                                     N/A
CRM was a boring old customer resource management software company. Its origins as a way for salespeople to manage their prospects and clients in one clean website database that their managers and company strategists could also tap into was just the beginning though.  The company has quickly leveraged its expertise as one of the first and most successful “Software as a service” businesses to become a platform and cloud network services provider to the world.  And the company’s many cloud businesses, from their old CRM software apps to their latest wholesale cloud services, are growing as the management navigates them into the future.  At a mind-blowing 95x forward earnings, the stock is definitely not without big risk.  But over the next ten years, this company could grow earnings 20% per year, every year, which would get earnings per share up near $20 a share.  Throw a 15 multiple on that and you get a $300 target. Ten years out though.
Revolution Investing Rating: 5/10
For each of the 30 stocks we’ve identified as most widely exposed to  the Cloud Revolution, we give a brief description of each company’s  primary businesses and outline some of the most important balance sheet  and business fundamentals. Rather than just going with a simple P/E, we  break down the enterprise value of each company, which makes companies  that have huge cash balances and lots of flexibility look cheaper than  those carrying big net debt loads around their necks.
From there I  give you some of my trademarked cut-throat Revolution Investing  analysis including some history of the company, how it’s trying to  position itself for the Cloud Revolution and how much I like or dislike  the investment prospects for that company.
And for those of you  who really just want a short hand rating system, don’t worry. I put a  Revolution Investing rating from 5 to 10 on each stock (I didn’t include  any of the dozens of lower rated Cloud Revolution Stocks we  researched).  Indeed, the aforementioned CRM is one of the lowest rated stocks in the book.  To find out the highest rated stocks, just get your hands the new eBook, “30 Stocks for the Cloud Revolution”, by visiting CloudRevolutionStocks.com or by subscribing to TradingWithCody.com, where you get access to all my investment books for free.

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