BlackBerry Stock Best Bet in 2016
The “iGeeks” will always love Apple Inc. (NASDAQ:AAPL) and are always quick to put down BlackBerry Ltd (NASDAQ:BBRY). But investors might not. In fact, there’s good reason to believe BlackBerry stock might outperform Apple in 2016.
No, I’m not joking.
On Tuesday, TD Securities said that BBRY’s stock price could have 30% upside potential. (Source: “BlackBerry Undervalued, Many Options to Grow,” BNN, February 2, 2016.)
You see, markets have become extremely thirsty for growth and there are good reasons for it. China’s economic growth has slowed down, while the eurozone is facing deflationary pressure. A lot of companies are lowering their guidance. That’s why when a company manages to give the slightest hint that it can grow its business, investors will rush towards it.
Global headwinds have made investors cautious about the outlook of consumer-facing companies. For instance, Greater China has become Apple’s second-largest market, only behind the Americas. Any shock to China’s economy could have a serious impact on Apple’s earnings. With investors concerned about this situation, AAPL stock has plunged more than 28% since last July.
Now, let’s look at BlackBerry.
BBRY Stock: Potential of a Startup?
BlackBerry is not what it’s used to be. But here’s the catch: if you manage to get over with the company’s success and glory in the past, you’ll see that BlackBerry is basically a startup.
Forget the BlackBerry OS, this startup is focusing on “Android.” In November, the company launched its first Android smartphone—the “BlackBerry Priv.” It’s a slider phone featuring a dual-curved, all-touch display and BlackBerry’s signature full QWERTY keyboard.
For those who are looking for smartphones with robust security features, the Priv is a great choice. And because it’s an Android phone, users get to enjoy all the “Google Play” store apps. Finally, because it’s a BlackBerry, it’s more secure than average Android phones.
The company has not released official sales figures of the new smartphone. But BlackBerry CEO John Chen did say that sales of the Priv were “so far, so good” at this year’s Consumer Electronics Show (CES) in Las Vegas. (Source: “BlackBerry Going All-in on Android Phones,” CNET, January 6, 2016.)
This startup is focusing on its strength—robust security features. While the switch to Android could help the company’s hardware segment, BlackBerry is also winning business on the software side.
In the three months ended November 28, 2015, BlackBerry’s non-GAAP software and services revenue surged 183% year-over-year. The neat thing is that around 70% of the quarter’s software revenue was recurring. Also, software services do not face the same product update cycle as hardware products. (Source: “BlackBerry Announces Third Quarter Fiscal 2016 Results,” BlackBerry Ltd, December 18, 2015.)
BlackBerry added 2,713 enterprise customers to its client base in the quarter. Right now, the company has approximately 25,000 enterprise subscribers. Many come from regulated industries and government. With recent acquisitions of Good Technology and AtHoc, BlackBerry could see more enterprise customer wins in the future. (Source: “BlackBerry Q3 Earnings: Software and Services Strategy and Mobility Acquisitions are Paying Off,” Inside BlackBerry, December 18, 2015.)
The Bottom Line on BBRY Stock
I’m not the only one bullish on Blackberry stock.
On Tuesday, February 2, TD Securities initiated coverage on the company and gave it a “Buy” rating with a price target of $9.00. That would imply a 30% upside from what the stock is trading now. (Source: Ibid.)
You can put your money in Apple stock and hope Carl Icahn can convince the government to allow the company to bring back its cash to return to shareholders. Or, you could be with the Waterloo, Ontario-based company when BlackBerry stock climbs back upward.