Salesforce.com is a cloud-based software company that designs and develops enterprise solutions. The company supplies a customer relationship management (CRM) service to businesses worldwide, providing a technology platform for customers and developers to build and run business applications.
Growing demand for more cloud-based software services, particularly as more businesses shift towards a digital operating model, should continue to provide support for the group in the long term.
Technically, a price that is developing a broadening wedge pattern makes the stock an attractive investment opportunity (see the green diverging trendlines on the main chart and insert).
An ascending broadening wedge is typically considered a bearish pattern once completed, however, the pattern is still incomplete. If the broader equity market is in a strong bullish phase, the ascending broadening wedge may represent a consolidation phase with increasing volatility before the price resumes the upward trend.
The share has moved beyond its 200-week and 200-day simple moving average of ~$206 and $201, respectively, which signals a bullish long-term trend.
According to forward RSI (Relative Strength Index) calculations, the stock will be overbought at ~$270, which makes our profit target realistic.
We suggest a medium capital at-risk allocation on this trade.
Share Information
| Share Code | CRM |
|---|---|
| Industry | Software & Services |
| Market Capital (USD) | 206.12 billion |
| One Year Total Return | 44.01% |
| Return Year-to-Date | 59.77% |
| Current Price (USD) | 211.84 |
| 52 Week High (USD) | 238.22 |
| 52 Week Low (USD) | 126.34 |
| Financial Year End | January |
| The share has made strong gains year-to-date, with several technical indicators suggesting further upside potential. Expect moderate volatility going forward. |
Consensus expectations
(Bloomberg)
| FY23 | FY24E | FY25E | FY26E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 5.24 | 8.06 | 9.38 | 11.08 |
| Growth (%) | 53.87% | 16.37% | 18.13 | |
| Dividend Per Share (USD) | - | - | - | - |
| Growth (%) | - | - | - | |
| Forward PE (times) | 26.27 | 22.58 | 19.11 | |
| Forward Dividend Yield (%) | - | - | - | |
| Strong earnings growth is expected over the short to medium term, with solid long-term prospects. The stock holds a Beta of 1.23, which indicates that it is slightly more volatile relative to the overall stock market. | ||||
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view:
| Share Name and position | MSFT (Take profit) |
AMT - Buy (Take profit) |
AMZN - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 331.32 | 178.19 | 138.07 |
| Current | 360.53 | 185.45 | 142.71 |
| Movement | 8.8% | 4.1% | 3.4% |
| We suggest taking profit, keeping an option open to re-enter on a pull-back.The share price breached our stop-loss level, and thus we closed the position. |
Price symmetry remains of interest. The stock is testing its 200-day moving average and the trade idea is regarded as a counter-trend strategy. Upside price momentum is supportive. The share is currently trading in overbought territory. As such, we have closed the trade and took profit to protect from downside risk.
Our profit target is $205 with a trailing stop-loss at $175. Exit the position around 24 January 2024. |
A megaphone pattern remains of interest. The stock remains above its 200-day moving average. Fading downside momentum is supportive.
Our profit target is $200 with a trailing stop-loss of $133.70. Exit the position around 23 February 2024. |
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