The Motley Fool’s Take
Salesforce launched a cloud-based customer relationship management platform in 1999, becoming the first company to adopt cloud computing on a large scale. Today, with a recent market value of nearly $160 billion, it offers productivity software for marketing, commerce, sales, and customer service, as well as tools for automating workflows,… data analysis and artificial intelligence.
Salesforce has transformed its capacity for innovation into a powerful brand. It captured 24% market share in CRM software last year – more than the next four competitors combined – marking its ninth consecutive year as the industry leader.
Its second-quarter revenue climbed 22% from a year ago to $7.7 billion, with management authorizing share buybacks of up to $10 billion.
Looking ahead, investors have good reason to be optimistic. Salesforce estimates its total addressable market to be $290 billion in 2026, meaning it has only captured about 10% of its future TAM so far. It can grow by further penetrating large enterprises, offering its platform to small and medium-sized enterprises, entering new industries and expanding into overseas markets.
Meanwhile, the stock recently traded at a forward-looking price-to-earnings ratio of 28, well below Salesforce’s five-year average of 58. This growth stock deserves a closer look. (The Motley Fool owns stock and recommended Salesforce.)
ask the fool
From QR to Las Cruces, New Mexico: What are “state securities”?
The madman responds: These are investments offered by a government, which bring in money that can be spent on anything from military operations to infrastructure renewal. Issuing these securities is often preferable to raising taxes or cutting spending somewhere.
In the United States, government securities include treasury bills (maturity of one year or less), notes (maturity of two to 10 years) and bonds (maturity of 20 or 30 years). They are considered very safe investments, as they are backed by the US government, with little risk of default. However, they tend to offer relatively low interest rates.
You can buy or sell Treasuries through many brokerage houses, or at TreasuryDirect.gov.
At HP in Knoxville, Tennessee: How do I set up an action watchlist?
The madman responds: Make a list of stocks you would like to watch, those that seem like promising investments. You can establish a watchlist, by entering each stock in a virtual portfolio, on several sites, including Finance.Yahoo.com, CNBC.com, MarketWatch.com and maybe even your brokerage.
A watchlist is particularly effective if you can enter a starting (or “buy”) price. This can be the price when you first noticed the stock or its price the day you added it to the portfolio. After that, each time you check the list, you’ll see how much each stock has gone up or down from those levels.
Research and follow companies on your watchlist to get to know them well. Tracking your listing will help you notice when the price of a business you’re interested in drops significantly, which can be a great buying opportunity. Just be sure to research why a stock dropped, to make sure any issues seem temporary.
school of fools
In this space, we often write about long-term investments, such as those you might make in the stock market. Investing in stocks can be a powerful route to wealth, but the stock market is not a good place for short-term money.
Any money you might need over the next five (if not 10) years is best kept out of inventory. That’s because the stock market slumps from time to time, and you don’t want to have to sell stocks when they’re down. The stock market has been up most years, but it drops every few years, sometimes in double digits.
Your short-term money can take many forms. To start, you should have an easily accessible emergency fund with three to six months’ worth of all non-negotiable living expenses. This money can save you trouble if you face a major auto repair, suffer a costly medical setback, or lose your job.
Your other short-term savings could be for expenses such as an upcoming vacation, a down payment on a car or house, a wedding, orthodontic treatments, or college expenses.
There are many places where you can store your short-term savings, such as bank savings accounts, money market accounts, certificates of deposit, short-term government and corporate bonds, and funds. specialized in short-term bonds. These options tend to be safer (and less volatile) than stocks, but they also tend to have lower growth rates. For example, the stock market has recorded average annual gains of almost 10% over several decades. Meanwhile, five-year CDs recently had interest rates between 3.5% and 4.25%, while most high-yield savings accounts offered no more than 3.25%.
It’s a good idea to separate your savings and your short-term and long-term investments and invest them differently. This way, your short-term dollars are available when you need them, and your long-term dollars are left alone to grow over years or even decades.
My dumbest investment
From NL, online: My dumbest investment has been buying things on credit. This debt prevented me from having the resources to invest earlier in my life.
The madman responds: Debt is a tricky thing. Some of them are almost unavoidable, like when you want to buy a house and need a mortgage, or if you need to borrow money for college or a car. Such debts may be acceptable if they charge reasonable interest rates and if you are able to repay them on time. Other debts, such as overuse of credit cards, can be dangerous to your wealth.
Imagine you owe, say, $40,000 on a credit card and you’re charged, say, 20% on it – a lot of people owe more than that, and a lot of cards charge more than that too. (Some cards charge 25% interest or more!) You’ll pay over $8,000 each year in interest alone. Obviously, meeting financial goals can be difficult if you’re spending $8,000 a year in debt. It is essential to get out and stay away from high interest rate debt. Once released, the interest you would have paid can be invested in retirement investments or to help you achieve other financial goals. When you’re tempted to buy something on credit, take a day or two to calm down – you might not be in such a rush to buy it later.
Who am I?
My roots go back to 1975, when I was founded by two young people who built and sold the first computer language program for a personal computer. I went public in 1986. With a market value recently over $1.8 trillion, I am a software giant. I also host a popular gaming system, cloud computing platform Azure, LinkedIn and Skype – and I buy video game company Activision Blizzard. One of my founders and his ex-wife gave away tens of billions of dollars. I plan to be carbon negative by 2030. Who am I?
Don’t remember the trivial question from last week? Find it here.
Answer to last week’s quiz: Merck