Is it worth investing in Salesforce?

Most of the hype surrounds tech stocks, especially after the sector’s king, Nvidia Corp. NASDAQ:NVDA, continued to surpass all-time high prices thanks to ever-increasing financial expansion. There is a risk of a “spillover” effect on other names.

Considering the new wave about to hit the business services sector of the U.S. economy, more “platform” technology stocks may soon attract the attention of traders and investors in the coming months. While you could try throwing darts at a board and have a good chance of success today, the focus is on picking the best positive outliers for more considerable upside potential.

For these and other reasons that will become clear in a second, stocks are popular Salesforce Inc. New York Stock Exchange: CRM could follow in Nvidia’s footsteps by surpassing its all-time high prices. Even today, it is creating an almost mirror image of another worthy mention in the services space that is already riding the wave of the economic boom: Intuit Inc. NASDAQ: INTU.

What is going on?

Why does everyone devour these stocks at the same time? These are two of the most followed leading indicators of the economy, the same ones that professional traders at investment companies like The Goldman Sachs Group NYSE:GS use to generate your own ideas.

In a “top-down” research process, these players begin by understanding what is happening in today’s economy. According to the latest jobs report, the US economy created 353,000 jobs in the past month, up 63.4% from 216,000 two months ago.

A job-creating economy needs the services of companies like Intuit to manage additional payroll and new employee hiring processes, so shares have risen as much as 40.3% over the past two quarters as traders forecast the recovery of the economy.

Second, and more important for the demand for the services offered by Salesforce, is the ISM PMI index. Goldman analysts highlighted their expectations for a manufacturing turnaround this year in their 2024 macro outlook report.

Suppose the manufacturing sector explodes into a new expansion. If that happens, its distant cousin (services) will also get sucked into an upward spiral of activity, requiring Salesforce’s help – it’s one reason why this stock is now trading above its 52-week high prices and is approaching a historical record. high price of $311.70 per share.

Why Salesforce?

Analysts at Wells Fargo & Company New York Stock Exchange: WFC AND UBS Group New York Stock Exchange: UBS they raised their price targets on Salesforce stock to $290 and $310 per share, respectively, directly implying a 7.4% and 14.8% upside from where the stock is trading today.

Autodesk Inc. NASDAQ: ADSK attracts some of the activities mentioned in its business model. The market is still on Salesforce’s side. Expecting earnings per share growth of just 7.3% over the next 12 months, Autodesk is below it all.

Salesforce analysts expect EPS growth of 20.1% next year, a growth rate that is far higher than Autodesk and Intuit’s 16.9% and higher than the industry average of 12.2%. . Since EPS typically drives share prices, this growth should be enough to highlight why these price targets may be conservative for the stock.

Its price-to-book ratio of 4.8x is lower than Intuit’s 10.8x and Autodesk’s 37.3x today, representing a discount of 55.5% and 87.1%, respectively.

Before you consider Intuit, you’ll want to hear it out.

MarketBeat tracks Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and Intuit wasn’t on the list.

While Intuit currently has a “Moderate Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.

View the five stocks here