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Stocks in this article: AZO CRM WM PAYX ICE

Salesforce.com

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It's been a rough year for Salesforce.com ( CRM). While the broad market is up double-digits since the calendar flipped over to January, Salesforce is actually down 10% over the same time period. That's helped to add confidence to short sellers of the $22 billion technology firm, shoving CRM's short interest ratio up to 11.47. That means that at current volume levels, it would take more than two weeks of buying pressure for shorts to cover their positions.

>>4 Big Tech Stocks on Traders' Radars

Salesforce.com's marquee product enables its 100,000-plus customers to run business applications that interact with their customer lists, doing everything from sending newsletters to tracking sales. That mission-critical nature of Salesforce's offering digs a big economic moat. So does the firm's position as one of the first major business application vendors to focus on the cloud. By pioneering the software-as-a-service model, the firm has a major lead on new rivals that are trying to enter the lucrative hosted CRM software market.

A cloud computing focus also gives the firm a sticky recurring revenue base from customers who have considerable resources invested into the firm's platform. The level of integration that Salesforce provides means that customer switching costs are very high. While CRM boasts an attractive balance sheet, it's struggled with profitability in recent quarters. That will have to change if it wants to show investors that it's serious about returning value to them. In the meantime, Salesforce remains in growth-mode -- and continued stair-step revenue increases should be a scary sight for short sellers.

I'd recommend keeping an eye out for earnings surprise when the firm announces second-quarter numbers in August.

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