1 Software Stock to Buy This November and 1 to Avoid

NYSE: CRM | Salesforce.com Inc News, Ratings, and Charts

CRM – The latest inflation report has raised the odds of the Fed slowing down on its aggressive rate hikes, which might bode well for the tech sector. Moreover, demand for software goods and services remains robust amid the rapid digital transformation. Given the backdrop, quality software stock Salesforce (CRM) could be an ideal buy now. However, Bill.com Holdings (BILL) might be best avoided, given its bleak fundamentals. Keep reading….

The consumer price index increased 7.7% in October, lower than expected, raising hopes that the Fed might slow down the pace of its rate hike in the next meeting, which might bode well for the software sector. San Francisco Fed President Mary Daly said, “Stepping down is an appropriate thing to think about.” The tech-heavy NASDAQ Composite has gained 6.1% over the past week.

Moreover, according to Gartner, enterprise software spending is projected to grow 8.6% in 2023. In addition, rapid digital transformation worldwide is boosting the application development software market growth. The market for application development software is anticipated to grow at a CAGR of 27.4%.

Given the backdrop, it could be wise to scoop up shares of fundamentally sound stock Salesforce, Inc. (CRM). However, Bill.com Holdings, Inc. (BILL) could be best avoided now, given its weak growth prospects.

Stock to Buy:

Salesforce, Inc. (CRM)

CRM is a customer relationship management technology provider. The company’s Customer 360 platform enables its customers to work together to deliver connected experiences.

On September 21, 2022, CRM partnered with Zywave at InsureTech Connect Vegas 2022. This collaboration aims to integrate the domains of insurance agency sales and client service, leading to more efficient, strategic workflows.

In terms of forward Price/Book, CRM is currently trading at 2.56x, 35.8% lower than the industry average of 3.99x.

CRM’s gross profit margin of 72.61% is 44.54% higher than the 50.24% industry average.

CRM’s total revenues came in at $7.72 billion for the second quarter that ended July 31, 2022, up 21.8% year-over-year. Moreover, its gross profit came in at $5.59 billion, up 18.3% year-over-year. Also, its income from operations came in at $5.4 billion, up 22.9% year-over-year.

Analysts expect CRM’s revenue to increase 17% year-over-year to $30.99 billion in 2023. Its EPS is expected to increase by 15.3% per annum for the next five years. It surpassed EPS estimates in all four trailing quarters. Over the past month, the stock has gained 7.3% to close the last trading session at $156.30.

CRM’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall B rating indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting. 

CRM has a B grade for Sentiment. In the Software – Application industry, it is ranked #31 out of 143 stocks. Click here for the additional POWR Ratings for Value, Stability, Momentum, Growth, and Quality for CRM.

Stock to Avoid:

Bill.com Holdings, Inc. (BILL)

BILL provides cloud-based software that simplifies, digitizes, and automates back-office financial operations for small and midsize businesses worldwide.

In terms of forward Price/Sales, BILL is currently trading at 12.63x, 400.7% higher than the industry average of 2.52x. The stock’s forward Price/Cash Flow multiple of 247.21 is 1340.8% higher than the industry average of 17.16.

BILL’s negative EBIT margin of 40.8% is lower than the 6.99% industry average. Its negative EBITDA margin of 29.1% is lower than the 12.18% industry average.

BILL’s loss from operations came in at $87.69 million for the first quarter that ended September 30, 2022, up 18.2% year-over-year. Moreover, its net loss came in at $81.64 million, up 9.9% year-over-year.

BILL’s EPS is expected to decrease by 28.7% per annum for the next five years. Over the past year, the stock has lost 63.3% to close the last trading session at $120.14.

BILL’s overall D rating equates to a Sell in our POWR Ratings system.

It has an F grade for Stability and a D for Value, Momentum, and Quality. It is ranked #121 in the same industry. Beyond what is stated above, we’ve also rated BILL for Growth and Sentiment. Get all BILL’s ratings here.

CRM shares were trading at $159.33 per share on Friday afternoon, up $3.03 (+1.94%). Year-to-date, CRM has declined -37.30%, versus a -15.03% rise in the benchmark S&P 500 index during the same period.

About the Author: Rashmi Kumari

Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...

More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
CRMGet RatingGet RatingGet Rating
BILLGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com

2024 Stock Market Outlook

The time to think about the 2024 stock market is now. Will it be a bull or bear? Where does the S&P 500 (SPY) end the year? And what are the top picks to outperform? Investment veteran Steve Reitmeister does his level best to answer all these questions. Just read on below...

3 Stocks Bringing AI to the Masses

Like it or not, large companies with a combination of cash and massive databases do have an advantage in the new AI world. These three companies are wielding that advantage to get a leg up in the rapidly changing AI landscape. Keep a close eye on how these companies, Meta (META), Alphabet (GOOGL) and Yelp (YELP) continue to take advantage of their respective incumbencies to shape the consumer’s interaction with AI.

With Oil Soaring, My Under $10 Stock of the Week

The number of oil rigs in the U.S. and Canada has decreased by 170 over the past year. International oil suppliers are cutting output. This opens the door to small oil and gas exploration and development companies like Baytex Energy (BTE).

Income Stock of the Week: Manhattan Bridge Capital (LOAN)

In the current high mortgage rate environment, and with financial instability growing in the commercial real estate market, you want to be extra diligent when investing in mortgage lenders. This lender has a sterling track record of providing short term loans to those needing some quick extra cash. And Manhattan Bridge Capital (LOAN) is rewarding investors with a hefty dividend.

Stock Market vs. Bond Rate Relationship Revealed

The stock market is affected by many things like the Fed and the economy. However, there is not enough talk about how the movement of bond rates makes stocks more or less attractive. Like how the S&P 500 (SPY) is having a terrible September as bond rates explode higher. Learn more about this dynamic relationship and what it means for stock prices in the days ahead.

Read More Stories

More Salesforce.com Inc (CRM) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All CRM News