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

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Based on the aggregated intelligence of 140,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, customer relations software specialist 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	$7.76 billion
Industry	Application software
Trailing-12-Month Revenue	$1.24 billion
Management	Co-Founder/CEO Marc Benioff CFO Graham Smith
Return on Capital (Average, Past 3 Years)	5.7%
Price-to-Earnings (CRM and Industry)	123.5 and 21.1
1-Year Return	174%
Competitors	IBM (NYSE: IBM) Oracle (Nasdaq: ORCL) Microsoft (Nasdaq: MSFT)
CAPS Members Bearish on CRM Also Bearish on	Amazon.com (Nasdaq: AMZN) Johnson & Johnson (NYSE: JNJ)
CAPS Members Bullish on CRM Also Bullish on	Google (Nasdaq: GOOG)

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

On CAPS, 58% of the 370 All-Star members who have rated salesforce.com believe the stock will underperform the S&P 500 going forward. These bears include All-Stars mrindependent and CaptBS, both of whom are ranked in the top 6% of our community.

Just last week, mrindependent didn't seem completely sold on salesforce.com: "Salesforce is a solvent rapidly growing company with an enviable product niche. That being said, I think its 150% price run-up this year is unjustified and the company will have trouble living up to stratospheric expectations."

In an earlier pitch, CaptBS expands on salesforce.com as a classic "good company, bad stock" situation. Here's an excerpt:

It's hard to argue that Salesforce hasn't been a highly successful pioneer in a previously unoccupied space, and as a result has staked out a sizable market share and established some nice recurring revenue streams. However, I think the "over-hyped" argument also has merit, as I see a parallel between the manner and levels with which the market currently values this stock and the way it valued some of the dot-com flameouts of the late 90s.

Bottom line: there's no doubt that SalesForce.com has changed the way we think about software and how it is delivered, but once the dust kicked up by its torrid growth and the surrounding hype settles, the foolish fundamentals would suggest that this stock faces an increasingly higher likelihood for underperformance.

What do you think about salesforce.com, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. The CAPS community is waiting to hear your opinions. CAPS is 100% free, so get started!