Growth Stock Portfolio: 5 Stock Picks By Hedge Funds

3. Salesforce, Inc. (NYSE:CRM)

Number of Hedge Fund Holders: 116

P/E Ratio as of November 3: 276.65

Another firm preferred by hedge funds for a growth stock portfolio is Salesforce, Inc. (NYSE:CRM), an American provider of customer relationship management technology and platforms to deliver connected experiences to customers. In mid-October, activist investor Starboard Value reported taking up a “significant” stake in  Salesforce, Inc. (NYSE:CRM), which elevated the stock. 

Macquarie analyst Sarah Hindlian-Bowler on November 2 assumed coverage of Salesforce, Inc. (NYSE:CRM) with an Outperform rating and a $210 price target. The analyst believes the shares are undervalued and forecasts that the firm will end its multiple contraction with growth from Cloud Suite and improving margins.

According to Insider Monkey’s data, 116 hedge funds were long Salesforce, Inc. (NYSE:CRM) at the end of Q2 2022, compared to 114 funds in the last quarter. Harris Associates is a prominent stakeholder of the company, with over 5 million shares worth $829 million.

Here is what Cooper Investors Global Equities Fund has to say about Salesforce, Inc. (NYSE:CRM) in its Q3 2022 investor letter:

“It seems unfashionable to discuss technology stocks given the current market mood, but we are observing positive signs from US software companies in terms of their journey along the ‘HubrisHumility’ cycle. We have trimmed and concentrated our software exposure significantly over the last 18 months down to two cloud-native SAAS players, Workday and Salesforce. We met with both businesses during our trip and came away encouraged from language indicating increased focus on profitability and cost control.

We see significant optionality in these businesses to grow at the same time as expanding margins and free cash flow. The discussions increased our conviction that returns on capital are now becoming a priority for CEOs and CFOs in this sector who are talking for the first time about cost discipline, reduced capex, more measured hiring practices, a reduction in the level of stock-based compensation and scaled back M&A ambitions. Salesforce in a recent earnings update announced its first ever buyback for US$10bn…” (Click here to see the full text)

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