My apologies that I didn’t get this post up last night but I had a short, strange, and very scary attack of vertigo at the end of my working day and missed that deadline. Everything seems to be fine today so here’s the post.
When I added Salesforce.com (CRM) as my third artificial intelligence pick in my Next Big Thing Special Report on my JubakAM.com subscription site on October 30, I wrote that given the volatility in the general market “I think I’d like to see the stock hold the 200-day moving average or move above it before piling in. But I would note that Salesforce.com is one of the very fe stocks that Morningstar calls undervalued. The fair value for these shares, according to Morningstar is $180.” Well, the stock broke strongly above the 200-day moving average in the October 31 session and 15 minutes before the close traded at $137.95, up 4.4% for the day. So I’ll adding it to my Jubak Picks Portfolio tomorrow, November 2. In my Special Report on JubakAM.com I wrote: You shouldn’t be surprised at seeing Salesforce as an artificial intelligence pick since the company has, since its founding in 1999, made a habit of riding the big waves in technology. At its start Salesforce was a sales force automation application and then it became one of the first software companies to successfully embrace the cloud and the software as a service model and now with the addition of its Einstein assistant to its platform, the company has integrated an AI component into its CRM (customer relationship management software.) I think you can intuitively understand how adding the pattern recognition abilities of artificial intelligence to a sales management system might be valuable. The AI assistant can find patterns in sales data–what offers work best with what groups of customers, for example–that can lead to more sales by a Salesforce user. The whole game in CRM is to add value for the customer’s sales effort. Salesforce has about 40% of the CRM software market and its products command a price about 20% higher than the competition, When it was founded the company’s total addressable market was about $750 million. Morningstar now estimates the addressable market at at more than $100 billion. Revenue has grown by 20% annually in recent years and the growth of the market should make it possible for Salesforce to continue that growth rate. The company now has a market cap of $100.04 billion and trades at a trailing 12-month price to earnings ratio of 137. The stock shows a recent high (on September 27) at $160.43 and closed at $132.17 on October 30.” I’m setting a one-year target price of $185 on these shares.