Despite being a prominent player in the booming tech space, shares of Salesforce (CRM) look extremely overvalued now. So, instead, we think it could be wise to scoop up the shares of the big tech companies Microsoft (MSFT), Cisco (CSCO), Intel (INTC), and International Business Machines (NYSE:) because these companies are well-positioned to capitalize on industry tailwinds.One of the top customer relationship management companies, San Francisco-based Salesforce.com, Inc. (NYSE:), reported top- and bottom-line growth for its fiscal first quarter, ended April 30, 2021. And on June 23, the company also announced a significant expansion of its global strategic partnership with Amazon.com, Inc.’s (NASDAQ:) cloud segment—Amazon Web Services, Inc. (AWS)—on June 23. However, the stock has lost 2.1% over the past month and 7.8% over the past nine months to close yesterday’s trading session at $237.58.
On June 30, CRM announced the pricing of an offering of $8 billion of senior notes, the proceeds from which it expects to use to partially fund fees, costs, and expenses related to the acquisition of Slack Technologies, Inc. (NYSE:), among other uses. Analysts expect its EPS to decline 36.8% for the current quarter ending July 31, 2021, and 22.6% in 2022. But, given its weak earnings outlook, the stock looks overvalued at the current price level. In terms of forward EV/S and P/S, CRM’s respective 8.31x and 8.47x are higher than the 4.14x and 3.96x industry averages. However, the tech industry has immense growth potential given the increasing use of advanced technologies across most of the sectors. The increasing demand for IoT and AI-based products and services is further expected to drive the industry forward.
While CRM may not be a good bet right now, we think that one could cash in on the tech industry’s solid growth by betting on established players Microsoft Corporation (NASDAQ:), Cisco Systems, Inc. (NASDAQ:), Intel Corporation (NASDAQ:), and International Business Machines Corporation ( IBM ), which have immense upside potential.
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