Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

Is Research In Motion a Star While Apple Is a Dog?

Monday, December 10th, 2012
By for Profit Confidential

Star While Apple Is a DogOn September 21, Apple Inc. (NASDAQ/AAPL) was on top of the technology world as the toast of Wall Street and could do no wrong, reaching a record high of $705.07. We started to hear whispers of Apple becoming a $1,000 stock with a trillion-dollar market cap. The superlative growth of the “iPad” tablet and the “iPhone” was driving Apple higher, based on my stock analysis.

Meanwhile, my stock analysis said Research In Motion Limited (NASDAQ/RIMM; TSX/RIM) was dead in the water with old technology in its once widely sought-after “BlackBerry” and its tablet “Playbook” being horrible failures. The company was being dumped by corporations once loyal to the BlackBerry, and it seemed the company was destined to collapse at the mercy of Apple, based on my stock analysis.

But something strange is now happening in the equities market.

Research In Motion (RIM) has surged 84% since September 21, while Apple has declined 22% in the same period, according to my technical analysis.

RIMM Research in motion ltd Nasdaq stock market chart

Chart courtesy of www.StockCharts.com

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Apple is also on the verge of entering into a death-cross situation on its chart, as its 50-day moving average (MA) of $602.31 is precariously holding above its 200-day MA of $601.26.

AAPL Apple Nasdaq stock market chart

Chart courtesy of www.StockCharts.com

The question is: have the companies’ fortunes reversed course?

The smartphone and tablet markets are extremely competitive, and I expect they will heat up further, based on my stock analysis.

Apple dominates the tablet market but is facing rising and tough competition from all fronts, which is pressuring the stock as traders exit with great stock gains, based on my stock analysis.

My stock analysis is that there are new entries from Microsoft Corporation (NASDAQ/MSFT) and its “Surface” tablet (read “Why Microsoft is Only an Afterthought on Wall Street”), along with the “Nexus” tablet from Google, Inc. (NASDAQ/GOOG) and Samsung’s “Galaxy” series.

And then there are also some RIM believers surfacing as the company gets set to launch a new line of devices powered by its new “BlackBerry 10” (BB10) operating system in the first quarter of 2013. We are seeing a wave of optimism, albeit cautious, from Wall Street toward RIM’s new BB10, which is helping drive up the share price, based on my stock analysis.

Goldman Sachs is positive on RIM, but then there are the doubters as well, with investment bank Canaccord Genuity downgrading the stock to a “sell” from a “hold.”

According to Thomson First Call, only one firm rates RIM a “strong buy,” with four rating it a “buy” and the majority (26 firms) as a “hold.” Eleven firms rate RIM an “underperform,” while six have a “sell” on the stock.

Can RIM ever regain its former luster? My stock analysis is that the company has a long and tough road ahead of it; and while it’s unlikely that RIM will catch Apple, the best-case scenario would be to take some market share away from Apple and the other market players.

All hope lies with the acceptance of its BB10, based on my stock analysis.

One great product and RIM could see happier times.

In my stock analysis, RIM will really need to deliver a great product; otherwise, it could be lights out in a few years.

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George Leong - Financial Planner, ConsultantGeorge Leong, B. Comm. is a Senior Editor at Lombardi Financial, and has been involved in analyzing the stock markets for two decades where he employs both fundamental and technical analysis. His overall market timing and trading knowledge is extensive in the areas of small-cap research and option trading. George is the editor of several of Lombardi’s popular financial newsletters, including The China Letter, Special Situations, and Obscene Profits, among others. He has written technical and fundamental columns for numerous stock market news web sites, and he is the author of Quick Wealth Options Strategy and Mastering 7 Proven Options Strategies. Prior to starting with Lombardi Financial, George was employed as a financial analyst with Globe Information Services. Add George Leong to your Google+ circles