With Salesforce (CRM) shares up a whopping 68% this year, including a 3% pop Thursday after another terrific earnings report, it may seem the right time to take profits. But we don’t believe the cloud software company’s incredible run is over — not even close. Improved profitability, demonstrated again in its fiscal 2024 second-quarter results reported Wednesday night, are behind Thursday’s gains. In fact, Salesforce’s adjusted operating margins blew past Wall Street estimates for the third quarter in a row, fresh evidence that the Marc Benioff-led firm can continue to boost profits while also growing at scale. We see that approach driving shares much higher from here. In fact, Jim Cramer says the stock should work its way back to its old highs above $300 per share reached almost two years ago – nearly 40% above where it’s trading Thursday. “This quarter puts Salesforce in a league of its own and isn’t being appreciated nearly enough at these prices,” Jim says. “Even as the stock has rallied, it deserves to go much higher because [Benioff is] still not satisfied with the current numbers.” CRM YTD mountain Salesforce’s year-to-date stock performance. The current margin numbers are quite impressive considering where Salesforce stood a year ago. In the fall, a swarm of activist investors — starting with Starboard Value’s Jeff Smith — began to push for improvements at the company. When Starboard disclosed stake in the firm in October, Smith chided Salesforce’s “subpar mix of growth and profitability” compared with its business software brethren. That is likely why Salesforce stock traded at a valuation “well below” its peers, Smith argued at the time. He centered that belief on a software investing concept called the “Rule of 40.” The basic idea is that ideally a company’s revenue growth rate and operating margin, when added together, should total at least 40%. In its October presentation on Salesforce, Starboard said the Club holding checked in at 37.4%,…
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