The trouble continues for a couple of technology companies that were beloved by the Street for the past decade. Research in Motion (RIMM) and Netflix (NFLX) have been high flying stocks that have made a ton of cash for early investors. If you got in early enough then your ownership stake may have made you rich. If you got in late then you have lost a ton of money from your investment. [Read more...]
RIMM Isn’t Toast Yet
December 16, 2010 By Leave a Comment
Shares of Research In Motion (RIMM) increased 2% in after hours trading as the company reported better 3rd quarter earnings than expected. Analysts were looking for revenue of $5.4 billion and an EPS of $1.64.
Is Research In Motion Really In Trouble?
December 15, 2010 By 8 Comments
According to a Yahoo Tech Ticker post, James Altucher believes that Nokia and Research In Motion days as players in the smartphone market are nearly over. Altucher gives a remarkably bold prediction about the fate of two of the country’s larger technology companies.
Microsoft Should Buy Research In Motion
October 7, 2010 By 2 Comments
Shares of Microsoft (MSFT) currently trade for $24. This is nothing new as the stock has traded at this price many times since the 90’s. The company has been able to grow earnings at an 11% clip and is trading right in line with its future earnings growth. Despite these solid results, the stock has been unable to rise at all. The stock is down 12% over the past decade. Recently, an analyst at Goldman Sachs and a reporter at Forbes have recently called for the breakup of Microsoft. While this is not a bad idea; I think that a better solution for Microsoft would be to acquire Research in Motion (RIMM).
Here are two moves that Microsoft can make to become more competitive.
Research In Motion Unveils Its New Smartphone
August 3, 2010 By 3 Comments
Research in Motion (NASDAQ: RIMM) unveiled its new Blackberry operating system today. The new operating system is called the Blackberry 6 and is designed to compete against the Android and iPhone operating systems. The new operating system operates via touch screen and trackpad. The phone has expanded messaging capabilities that simplify managing social media and RSS feeds, an advanced multimedia experience that rivals the best in the industry, a convenient new Universal Search tool.”
Is Research In Motion A Value Stock or Value Trap?
June 25, 2010 By 4 Comments
It’s always important for value investors to be able to tell the difference between a value stock and a value trap. Value stocks are stocks that are trading below their true intrinsic value. These stocks are sometimes unfairly beaten down due to market events. Value traps are stocks that look like good investment opportunities and may appear to be cheap but really are not. Value traps deserve to trade at low prices. A value stock is a good company trading at a distressed price. A value trap is a distressed company trading at its proper price.
Value Stock or Value Trap?
Take Research in Motion for example. Research in Motion (RIMM) trades at $52 a share as shares plunged over 10% after releasing subpar earnings Thursday. Sales and subscribers slightly underperformed Wall Street expectations. Research in Motion continues to lose market share to the iPhone and Android phones. Analysts have been rushing to downgrade the stock hitting it with sell ratings. Research in Motion is a stock that is close to becoming a value play. If investors get an opportunity to buy shares in the 40’s, that would be a solid purchase.
Despite all of the negativity over Research in Motion, the company is still adding subscribers. The company is still growing just at a slower rate. 2011’s EPS is expected to come in at $5.90. Research in Motion is cash rich with $1.5 billion in cash and no long term debt. The company has even started buying back 3% of the outstanding shares. The key for RIMM is its new Blackberry phone. Will its new Blackberry phone be able to take market share from the Google’s and Apple’s of the way? Analysts believe that will all depend on how successful RIMM’s new apps and browser is.
My Take
I have to admit there is some risk in buying RIMM but the opportunity to buy a solid tech company trading at just 7.5 times earnings would be attractive to me in the mid 40’s.
Do you think that Research in Motion is a value stock or a value trap?
3 Stocks To Keep An Eye On
January 19, 2010 By Leave a Comment
1. Amazon (AMZN)- The ecommerce giant has been on a tear over the past year rising from the high 40′s to $127 per share. Many analysts have placed a buy rating on the stock and price targets keep going up. Forward earnings are expected to come in at $2.58. Price to earnings growth is 2.5. This stock is priced for continued earnings growth of 20% or more. I like Amazon’s business model but the stock is currently trading at 75 times earnings. Any hint of slowing earnings growth over the next year and Amazon’s shares will get hammered.
2. Research In Motion (RIMM)-Research in Motion appears to be fairly valued and has been one of the best tech companies of the past decade. RIMM grew its revenue by over 40% last quarter but the smartphone market is becoming a crowded place with increasing competition from Apple and Google. Palm has just signed a deal with Verizon to begin offering their smartphones at the nation’s largest wireless carrier. It appears that RIMM will have to increase spending on marketing just to maintain their current market share.
3. US Steel (X) – The nation’s largest steel company saw its shares decimated during the global recession. Shares have rebounded almost 300% from the $16 level. While I like US Steel as a long term holding; the stock has gotten ahead of itself over the near term. US Steel is trading at $65 a share and has a forward PE of 52. This is based on estimated earnings of $1.24. Some analysts are even anticipating a loss as large as $3 per share for 2010. If you were one of the smart investors that got in at $40 or below; it may be a good time to trim your position and take some profits.
Three Missed Opportunities
January 9, 2009 By 1 Comment
Below is a list of some investments that i wish i had pulled the trigger on:
I had placed Research in Motion(RIMM) on my watchlist when it was $37. I kept waiting for RIMM to drop to $32 to buy. It never happened and now RIMM is at $47.
I could have bought Transocean (RIG) at $47. I thought that it would dip back to its 52 week low of $41.95. Transocean is now at $55.
I missed US Steel(X) at $25. It looked cheap at $25 but I kept waiting for it to get cheaper. US Steel had just bounced off its low of $20.71. US Steel now trades at $37.
And one more.
I thought about buying Palm(PALM) at $2.50 per share last week. The stock is now over $6 per share on the upcoming release of its new smartphone, the Palm Pre. I don’t regret not buying Palm despite the stock’s huge run up because I couldn’t find any fundamental reason to invest in Palm. Even though the stock is at 6 now, it could just as easily trade at $1 based on the company’s troubles.
