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Salesforce.com (NYSE:CRM) attracts a lot of attention as a software-as-a-service vendor which many businesses pay to manage their data. CRM has grown sales dramatically, and trades at mind-boggling valuations. Should retail investors jump on the Salesforce.com bandwagon based on fabulous sales growth and its broad presence in business?

No. As simple as it sounds, you are better off shopping around than using the media or fame as filters to select for familiar or popular stocks. Independent research allows investors to go beyond the stocks featured in the news and shop lesser-known alternatives.

Salesforce.com is a great company, but its stock trades at troubling, enormous valuations. Screening other, less famous stocks reveals stocks which are poised to grow faster and which are trading at lower valuations. The future potential of these surrogate stocks can be gauged by using financial metrics to determine how cheaply a stock is priced, its ability to weather hardship and its growth potential.

As alternatives to CRM, consider the following stocks with solid credit scores:

Ticker

Company

Industry

Altman Z-score

(NASDAQ:ASYS)

Amtech Systems Inc.

Semiconductor Equipment & Materials

3.19

(NASDAQ:CTCT)

Constant Contact, Inc.

Marketing Services

13.22

(NASDAQ:GMCR)

Green Mountain Coffee Roasters Inc.

Processed & Packaged Goods

6.25

(NASDAQ:OPEN)

OpenTable, Inc.

Business Services

13.38

(NYSE:RAX)

Rackspace Hosting, Inc.

Information Technology Services

10.73

(SXCI)

SXC Health Solutions, Corp.

Application Software

11.73

(CRM)

Salesforce.com

Application Software

5.86

Like CRM, these alternative stocks are all categorized as "safe" according to the Altman Z-score, indicating that they are not considered bankruptcy risks. They are diversified across industries. These stocks are cheaper, and have better growth prospects than Salesforce.com:

Ticker

P/E

P/S

EPS growth past 5 years

EPS growth next 5 years

Sales growth past 5 years

ASYS

4.0

0.36

45.9%

35.0%

43.6%

CTCT

39.8

4.25

95.4%

37.4%

50.7%

GMCR

32.4

3.01

75.4%

32.9%

63.7%

OPEN

55.5

7.92

123.8%

28.3%

42.7%

RAX

103.2

6.65

26.3%

30.4%

41.3%

SXCI

47.7

0.93

32.6%

28.4%

104.8%

CRM

6422.0

8.35

14.5%

25.8%

39.8%

These stocks are less famous, but they have better stats. Based on lower price multiples, these stocks are cheaper than Salesforce.com at current market prices. Amazingly, ASYS is the only cheap stock on this list, yet all the expensive stocks on this list are still cheaper than Salesfore.com. Oddly, each of these stocks has better growth prospects, according to historical trends and analyst projections. Thus CRM's price would have to drop significantly to become competitive with these stocks because at current, mostly high, valuations they are simply better deals.

Rather than restrict yourself to concentrated investments in Salesforce.com, consider a diversified mix of these six securities as more attractive alternatives.

Please read the article disclaimer for this article and Altman z-score calculations.

Source: 6 Tech Stocks That Are Better Investments Than Salesforce.com