1-Star Stocks Poised to Plunge: salesforce.com?

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Based on the aggregated intelligence of 135,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, internet-based software provider salesforce.com (NYSE: CRM) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at salesforce.com's business and see what CAPS investors are saying about the stock right now.

Salesforce.com facts

Headquarters (Founded)	San Francisco (1999)
Market Cap	$4.78 Billion
Industry	Application Software
Trailing-12-Month Revenue	$1.13 Billion
Management	Co-Founder/CEO Marc Benioff CFO Graham Smith
Return on Equity (Average, Past Three Years)	5.3%
TTM Price-to-Earnings (CRM and Industry)	92.8 and 28.3
Competitors	Oracle (Nasdaq: ORCL) SAP (NYSE: SAP) IBM (NYSE: IBM)
CAPS Members Bearish on CRM Also Bearish on	Amazon.com (Nasdaq: AMZN)
CAPS Members Bullish on CRM Also Bullish on	Apple (Nasdaq: AAPL) Google (Nasdaq: GOOG)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 415 of the 923 members who have rated salesforce.com -- some 45% -- believe the stock will underperform the S&P 500 going forward. These bears include All-Star SuperPicks, who is ranked in the top 0.5% of our community, and funkywizard.

Late last month, SuperPicks wrote that the bear case all boiled down to price:

Short candy. My modified future earnings book value estimate is 700m for this company tops. At market value well above $4 billion today, well let's see, that's about 5 times book value at least.

In a pitch from earlier in the year, funkywizard shares that same bearish sentiment:

Although I'm not aware of any issues on the demand side for their service, I feel their current valuation is unsustainable. … I think it won't take much for people to decide a PE of 50-90 is overpriced and get out before others realize the same. With the mantra of permanent growth being the justification for such PE's in the past, it will only take a couple quarters of little to no growth in the overall economy before a change in growth expectations brings stock PE's into the high single digits on average. Will this stock drop in the next year or two? I certainly expect so.

What do you think about salesforce.com, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 135,000 investors are waiting to hear what you have to say. CAPS is 100% free, so get started!