5 Best Depressed Stocks to Buy Now

2. Salesforce.com Inc. (NYSE:CRM)

Number of Hedge Fund Holdings: 116

YTD Decline (As of November 9): 39.64%

Based in San Francisco, California, Salesforce Inc. (NYSE:CRM) is an American cloud-based software company which specializes in providing customer relationship management software and applications focused on sales, customer service, marketing automation, analytics and application development. In the third quarter of 2022, Salesforce Inc. (NYSE:CRM) posted an EPS of $1.19, beating estimates of $1.02 by $0.17. Total revenue generated by the company in Q3 2022 was $7.72 billion. In Q2 2022, hedge fund sentiment around Salesforce Inc. (NYSE:CRM) became more favorable, with 116 funds having stakes in the stock, up from 114 in the preceding quarter.

On November 10, Oppenheimer analyst Brian Schwartz lowered the price target on Salesforce Inc. (NYSE:CRM) to $200 from $240, maintaining an Outperform rating on the shares. The analyst’s research mosaic uncovers mixed business trends for the company in Q3 2022. However, Schwartz remains confident that the company has an expansive installed customer base to capitalize upon and a highly profitable subscription revenue stream which is projected to play an important role in shielding the company from the current economic climate. The analyst reiterates that the shares are grossly undervalued and expects that Salesforce Inc. (NYSE:CRM) will conclude its multiple contraction with Cloud Suite driven growth and improve margins.

Here is what ClearBridge Investments had to say about the overlooked potential of Salesforce Inc. (NYSE:CRM) in their Q3 2022 investor letter:

“Software has been a solid long-term performer for the Strategy and a key point of differentiation versus the benchmark. But even recurring revenue businesses enabling digital transformation are not immune from the vagaries of the COVID-19 recovery. Salesforce, Inc. (NYSE:CRM) (-12.8%) has detracted from results due to slowing revenue growth driven by a combination of factors, including pull-forward of enterprise digitization demand during COVID-19, some operational missteps, and lengthening sales cycles.

We believe the company still has ample room for revenue growth across its various platforms and should benefit from budget consolidation as customers seek control over tech spending in a weakening economy. We also see significant room for margin expansion. While we have trimmed our Salesforce (CRM) exposure, we maintain confidence that the stock will rerate to a level that reflects its growth potential.”