We recently compiled a list of the 12 Best Long-term Stocks to Invest in for High Returns. In this article, we are going to take a look at where Salesforce, Inc. (NYSE:CRM) stands against the other stocks.
The global economy seems to be at a point where fiscal ambition intersects with market skepticism, says Oakglen Wealth. Donald Trump’s presidential election and the Republican takeover of the US Senate and retention of the House of Representatives resulted in a complicated mix of policy goals. Notably, the broader market’s initial reaction hints at positivity given Trump’s plans for growth, hinting at the continued outperformance of US assets in the year ahead.
Sectors To Focus on in 2025
Fidelity has an optimistic view of the financial sector, primarily because of steady economic growth for the broader US economy. Since the financial sector is cyclical, the sector’s performance is mainly a function of the strength of the broader economy. The US economy has been showing momentum and a path towards the desired “soft landing,” says Fidelity. Therefore, worries about a mild recession (which could have impacted the financial stocks) are alleviated. One significant difference in market dynamics entering 2025, in comparison to recent years, is the outlook on interest rates.
The H2 2024 began a new rate cycle, with the US Fed cutting rates for the first time since the initial days of the pandemic. Banks might benefit from higher interest rates due to higher NIMs. On the other hand, lower rates can help boost confidence and decrease the pressure on economic growth, which is expected to be beneficial for virtually all industries in this sector, opines Fidelity. Within equities, Franklin Templeton has an optimistic outlook on IT, health care, energy, consumer staples, and industrial sectors.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Growth Drivers Amidst Policy Shifts
As per Russell Investments, the US economy is resilient as it enters 2025, but the road ahead is expected to be affected by shifting policy dynamics. On the positive side, tax cuts and deregulation can offer a meaningful growth boost, mainly to domestic and cyclical sectors. The investment firm believes that companies leveraging AI technologies to enhance productivity—mainly in industrials and healthcare— are expected to see material improvements to operating fundamentals.
Even though the mega-cap AI stocks have fueled the market returns over recent years, leadership has been shifting to companies leveraging AI to develop real-world efficiencies. Russell Investments believes that the Trump administration’s policies offer a delicate balancing act. It assumes that the new administration will not aggressively pursue policies that can create inflation risk.
Our Methodology
To list the 12 Best Long-term Stocks to Invest in for High Returns, we sifted through several financial media reports related to the best long-term stocks to buy. After getting an initial list of 20 stocks, we chose the ones which analysts saw the most upside to. Finally, the stocks were ranked in ascending order of their average upside potential, as of February 6. We also mentioned the hedge fund sentiments around each stock, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A customer service team in an office setting using the company’s Customer 360 platform to communicate with customers.
Salesforce, Inc. (NYSE:CRM)
Average Upside Potential: 25.2%
Number of Hedge Fund Holders: 116
Salesforce, Inc. (NYSE:CRM) is engaged in providing customer relationship management (CRM) technology, bringing companies and customers together. Agentforce demonstrates a significant opportunity for the company to capitalize on the elevated demand for AI-powered customer support solutions. Notably, the platform’s integration of generative AI agents into business workflows places Salesforce, Inc. (NYSE:CRM) in a strong position in this rapidly evolving market.
Moreover, the successful deployment of Agentforce is expected to strengthen its competitive position against rivals like Microsoft, supporting retaining current customers and attracting new ones seeking advanced and dynamic AI capabilities integrated into their CRM systems. Salesforce, Inc. (NYSE:CRM)’s growth is expected to be driven by an expansive product suite, together with seamless integrations and an innovative approach to enterprise solutions. Furthermore, its strategic acquisitions have strengthened its market position. The acquisition of Slack significantly aided Salesforce, Inc. (NYSE:CRM)’s collaboration capabilities, making the company an all-encompassing enterprise software provider.
Also, the acquisition of Own Company in 2024 strengthened Salesforce, Inc. (NYSE:CRM)’s data protection and AI capabilities. This move remains at par with the market trends revolving around growing enterprise priorities associated with security and automation. Montaka Global Investments, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“There are multiple structural trends in the enterprise software space, including (i) the ongoing cloud migrations and digital transformations of enterprises, and (ii) the infusion of AI into software applications.
While the former remains in its early innings (80-85% of enterprise workloads still reside ‘on-premise’ – many of which will ultimately move to public clouds), the latter remains in its infancy.
Given all the hype of late, it’s hard to fathom that large-scale deployments of AI-based enterprise applications have barely even started. It’s all still to come. And we believe 2025 will be the first year that we really start to see meaningful deployments and adoption of these kinds of applications.
Consider another of our top 10 holdings, Salesforce, for example. Its revenue growth is at a cyclical low. Indeed, at just +8% per annum, as reported in the company’s most recent quarter, its rate of revenue growth has never been lower.
But in 2025, not only will price increases that were announced two years ago boost Salesforce, Inc.’s (NYSE:CRM) revenue growth, but the year will also mark the early stages of adoption of the company’s new ‘Agentforce’ (released only weeks ago). This is a new platform that lets businesses build and deploy their own custom AI agents to automate tasks, improve efficiency, and enhance customer experiences…” (Click here to read the full text)
Overall CRM ranks 8th on our list of the best long-term stocks to invest in for high returns. While we acknowledge the potential of CRM as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than CRM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
