Investing in growth stocks can be particularly rewarding for investors, but it also carries higher risks and volatility. The key to successful growth investing lies in identifying stocks with above-average financial growth that still have significant room to expand. Here, we’ll delve into why Salesforce.com (CRM) is an good pick for growth investors right now, based on several compelling factors.
Salesforce.com: A Compelling Growth Story
1. Strong Earnings Growth When it comes to growth investing, earnings growth is paramount. Salesforce.com has a historical earnings per share (EPS) growth rate of 22.4%. More importantly, its projected EPS growth for the current year stands at a robust 42%, far exceeding the industry average of 10.4%. This significant earnings growth indicates that Salesforce is well-positioned for future success and is likely to see its stock price reflect that momentum.
2. Robust Cash Flow Growth Cash flow is the lifeblood of any business, and Salesforce.com is good in this department as well. Its year-over-year cash flow growth rate of 12.1% outpaces the industry average of 8.2%. Moreover, its annualized cash flow growth rate over the past 3-5 years has been 36%, in stark contrast to the industry’s 12.9%. This consistent growth in cash flow equips Salesforce with the flexibility to invest in expansion and innovation, reducing its reliance on external funding.
3. Promising Earnings Estimate Revisions Earnings estimate revisions serve as a strong indicator of a company’s future performance. Salesforce.com has been experiencing positive revisions in its current-year earnings estimates. This trend in estimate revisions generally correlates with near-term stock price movements, signaling that investors have a positive outlook for the company’s future performance.
Conclusion: Why Salesforce.com is a Great Pick
Salesforce.com’s impressive earnings growth, strong cash flow, and positive earnings estimate revisions make it a compelling investment opportunity. For investors seeking a growth stock with the potential for significant returns, Salesforce.com stands out as a strong contender.