(CRM 2.14%), one of the pioneers of cloud computing software, has been punished following its third-quarter earnings update. This comes in spite of the company beating the expectations that had investors feeling so optimistic just a month ago. Still, shares are down over 15% from their all-time high. I'm buying the dip here to get ready for 2022. Here's why.  

Someone in a home office looking at their smartphone.

Image source: Getty Images.

A play-by-play of this sell-off

It would be easy to blame this most recent sell-off in Salesforce stock on the omicron variant of COVID-19, but the drop actually deepened following the fiscal 2022 third-quarter update (for the three months ended Oct. 31, 2021). In fact, Salesforce actually beat its own guidance, reporting revenue growth of 27% to $6.86 billion during the quarter.  

This is confounding, because the same guidance Salesforce had been providing through the late summer and autumn is what had shares rallying in the first place (putting the stock up nearly 40% year to date by mid-November). Back in August, CEO Mark Benioff and his team increased full-year revenue guidance to at least $26.2 billion. A few weeks later, during the Salesforce investor day, that guidance was increased to $26.35 billion, and next year's guidance (fiscal 2023) was initiated for $31.8 billion. During the third-quarter update, the company again raised its current-year revenue outlook to at least $26.39 billion and reiterated next year's growth.

Perhaps given the cadence of upgrades this year, investors were hoping for a boost to next year's revenue as well. Either way, the market was unhappy. If the collective investor mindset were condensed into an individual person, they'd be highly irrational to say the least.

CRM Chart

Data by YCharts.

Nevertheless, for investors that like to buy more of their favorite, long-term winning stocks when they dip, now looks like the time to add to a Salesforce position. 

3 reasons I'm still buying

1. Another year of 20%-plus growth

Salesforce sometimes gets criticized for sustaining its top-line momentum with acquisitions. However, growing via acquisition isn't necessarily easy, and this software giant has done an exceptional job of not only pursuing this strategy but in some cases accelerating the growth of its purchases by plugging their newly acquired capabilities into its existing ecosystem.

For example, during the investor day presentation, Salesforce revealed its subsidiaries Demandware (acquired in 2016), Mulesoft (2018), and Tableau (2019) are all growing at a faster pace now than they were at the time of takeover. Whether you like the Salesforce strategy or not, Benioff and friends clearly know what they're doing.

2. Profit margins rising after the Slack acquisition

Another oft-cited knock against Salesforce is its subpar adjusted operating margins. It's not unusual for cloud software outfits to generate in excess of 20% margins, but Salesforce has yet to reach this rate of profitability -- in large part because of spending on marketing, development, and frequent acquisitions. 

But even after completing the takeover of Slack this year, adjusted operating margin is expected to be 18.6% for fiscal 2022. And next year, the company expects to finally reach that 20% milestone.

3. Steadily climbing toward $50 billion revenue goal

Though some shareholders may have been hoping for a boost to the fiscal 2023 outlook, Salesforce is nonetheless still on track to achieve its $50 billion annual revenue target by fiscal 2026. This represents a 90% increase over current-year levels. You can sign me up any day of the week to invest in a business this size that believes it will nearly double its top line in four years.

As Salesforce continues to leverage its strengths in a new digital era, the thesis for owning it remains intact. This cloud-computing giant's growth story is far from over, and after the recent sell-off, it still looks like a solid buy heading into the new year.