Thursday, May 11, 2017

Stocks to Watch: Blackberry Ltd. $BB

Blackberry ($BB), $10.49.



A few years ago, it was usual to see the image of Obama president using his Blackberry BB smartphone, following the daily events. In times when the first iphone governed sales, the Blackberry with keyboard, web and email included became synonymous with excellence and, above all, security. Research in Motion, the Canadian company that manufactured it was a penny stock, which was trading at $2 in 2003 to reach $150 in 2008, the year of its biggest boom. Everything changed in 2011 when the competition grew (Android, Samsung, Chinese smartphones) and RIM did not know how to renew itself, its technology and keyboard became obsolete, not very attractive for the young sector, which led to an epic fall in its stock and almost extinction of the company.


What better than the 15-year graphic of your stock to see the rise, fall and today's stability Blackberry: while the Nasdaq (in gray) went up, BBRY sank, until Chen arrived in 2013.

In those years, another iconic and dear manufacturer of PDAs and smartphones, Palm, had disappeared for the same reasons. Forgotten by Wall Street, RIM seemed to be the next victim, until in 2013 John Chen enters as CEO and in a few years gives a total turn to the company, from the symbolic fact of changing the name of RIM to Blackberry, to give new business approaches, including leaving some hardware to focus on the software, in a new and very future area: artificial intelligence AI. From these developments derives its novel software QNX for autonomous driving of vehicles, recognized as the safest in the market. Today it is installed in 60 million vehicles of almost 20 brands such as Audi, Ford, Honda, Toyota, BMW and Volkswagen, among others. The following video illustrates the comments.






This subsector, I believe, is going to become one of the attractive and lucrative sectors of the coming years. And Intel INTC knows, that is why it acquired 3 months ago the Israeli company Mobileye MBLY leader in the development of anti-collision systems and autonomous driving, for $15.3B. And he did it to compete directly in this area with his rival Qualcomm QCOM, which in 2016 had acquired NXP Semiconductor NXPI, manufacturer of vehicle chips. A third and important member in this fight is Nvidia Corp. NVDA, which I have dealt with recently. And it is known that Google GOOG and Apple AAPL also plan to enter this sector with their own operating systems, even at zero.

In this competition, I particularly like Blackberry, not only because "sentiment trading". For its growth potential (stock near $10.50 and with a long road to recover), the prestige gained from its brand, having its own software in development for many years and that legacy of digital security, vital for a niche such as autonomous driving. And if we add that they have an almost healthy balance with $940M, product of their recent and significant legal victory over Qualcomm for royalties paid in excess, we have the ideal framework for the development and appreciation of BB to continue.


As for trading, we still have to wait for a good moment, such as the end of the current Nasdaq correction (5 of the last 6 sessions down). Also keep in mind that this Friday 23th presents its earnings report. After these events, if they are positive, enter to invest long in this stock taking advantage of its low price, or in options a leap until January 2018 it looks attractive.

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