Jim Cramer’s Latest Mad Money Episodes: Top 10 Stocks to Watch

4. Salesforce Inc (NYSE:CRM)

Number of Hedge Fund Investors: 117

Talking about stocks that are getting too much “love,” Cramer said in a recent program on CNBC that Salesforce Inc (NYSE:CRM)’s rally is “unsustainable” and the stock needs a break. However, he’s bullish on the stock and said his charitable trust owns a stake in it.

“Speaking as a big believer in Salesforce, which we own for the Charitable Trust forever, I think the stock’s been on an unsustainable tear. It needs a breather … Again, I adore Salesforce—I just wish the stock would digest its gains here because this kind of straight-up rally makes me nervous. I like stair-step movements.”

Salesforce Inc (NYSE:CRM) is on investors’ radar because of its AI acquisitions. The company recently agreed to acquire AI voice agent firm Tenyx. This acquisition follows Salesforce’s strategic partnership with Workday to develop an AI-powered assistant for employees. The company has also agreed to buy SaaS data protection startup Own for $1.9 billion in cash.

Wall Street expects $11.12 per share in profits for Salesforce Inc (NYSE:CRM) next year, representing a 10% year-over-year increase. For the current financial year, profits are expected to grow by 23%, with estimates trending upwards. Based on these forecasts, Salesforce trades at a forward price-to-earnings ratio of 22, which is attractive given the AI-related growth catalysts.

Polen Focus Growth Strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its Q3 2024 investor letter:

“In the third quarter, we purchased new positions in Apple and Oracle and eliminated our small positions in Nike and Salesforce, Inc. (NYSE:CRM). We exited our position in Salesforce to fund better opportunities in Shopify and MSCI. Salesforce is seeing slower revenue growth than we would have expected, given the weakening macroeconomic environment. Furthermore, since its core end markets in customer relationship management (“CRM”) and Service are fairly mature, a lower growth level versus our expectations could persist for some time.”