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1-Star Stocks Poised to Plunge:

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, customer relations management, or CRM, software specialist (NYSE: CRM  ) has received the dreaded one-star ranking.

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

Salesforce facts

Headquarters (founded) San Francisco (1999)
Market Cap $21.7 billion
Industry Application software
Trailing-12-Month Revenue $2.3 billion
Management Co-Founder/Chairman/CEO Marc Benioff
CFO Graham Smith
Return on Equity (average, past 3 years) 5%
Cash/Debt $777.9 million / $557.2 million
Competitors Microsoft

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 48% of the 1,799 members who have rated Salesforce believe the stock will underperform the S&P 500 going forward.

A couple of months ago, one of those Fools, there4im, touched on the stock's seemingly unsustainable valuation:

Salesforce might have great software, but the stock is priced for perfection. I question the width of their [competitive moat] -- Can they fight off competition from Microsoft, SAP and others? I admit it might take a couple of years for the competition to catch up, but in the meantime, [Salesforce] does not seem to be cashing in all that well.

I suspect that two years from now, this will not be the darling of Wall Street that it is today. It will be just another software company -- with a down-to-earth multiple.

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Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Microsoft and Oracle.  Motley Fool newsletter services have recommended buying shares of Salesforce and Microsoft. Motley Fool newsletter services have also recommended creating a bear put spread position in Salesforce and a bull call spread position in Microsoft. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

Read/Post Comments (2) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 19, 2012, at 11:21 AM, felicitysdad wrote:

    This stock is giving me a nose bleed !

    But does any one have the courage to short it ?

  • Report this Comment On April 20, 2012, at 5:13 AM, Realexpectations wrote:

    it seems to me that companies like this get to be really good at what they do because its the only thing they really concentrate on. Like my roommate who is in track and field, is really one of the best on the team at long distance running, but have him do just about anything else, and hes not lookin to hot. I think one of the big problems is that theres no diversification. for instance cenex harvest states does energy, but is in almost every type of energy plus agriculture. One goes down, somethin else pretty much has gotta go up, almost like win win.

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