Research In Motion (RIMM) - Hard To Find Value Stock
Wednesday, April 13, 2022 1:30 PM



Finding value on the NASDAQ isn’t as easy as it was this time last year. With a nice, consistent run-up, particularly from September’s low around 2,100, the index is showing few indications of slowing down. While good news for most investors, it begs the question of how to take part in this growth without buying expensive, over valued shares.

As is often the case, there's opportunity here, we just need to dig a bit deeper to find it. One such example is Research in Motion, Limited (Ticker: RIMM), the Ontario-based company most noted for bringing the Blackberry and other wireless solutions to business and retail consumers around the globe. RIMM has a lot going for it right now, and a couple of recent hiccups that may end up serving investors well.

With a market cap over $28 billion, Research in Motion is one of the leading players in the wireless and smartphone markets. Firmly established with users worldwide, RIMM provides investors a measure of stability based on sheer size, its firm grip on an almost limitless marketplace and, as it stands today, outstanding value.

The Particulars

RIMM is currently trading just under $58 a share, up 2% from yesterdays (4/12/11) close. A nice little pop which, we're happy to say, is barely scratching the surface of what investors can expect going forward. The bump comes after testing resistance off the company’s 6-month low, reinforcing analyst sentiment that this is a stock that is poised to take off.

Accounting for today's uptick, RIMM is still trading at under 9x earnings, well below that of industry stalwarts like Apple (Ticker: AAPL) and Nokia (Ticker: NOK) that are currently priced at 18 and 12 times earnings, respectively.

Also, other than Apple, Research in Motion’s year-over-year quarterly earnings growth obliterates the rest of the industry, at 36%. To put it in perspective Nokia, one of RIMM’s closest competitors, provided investors earnings growth of just 5.50% during the same time frame. Oh, and let's not forget that RIMM is trading near the bottom of its 52 week trading range of $42.54 - $74.94 per share. Some may find that worrisome; on the contrary, this simply adds fuel to the Research in Motion fire.

Why RIMM is Cheap

With all the positives RIMM provides investors right now, it only makes sense to question why the stock is so cheap. The overriding reason is the delay in launching Playbook, the company’s answer to the iPad. The delays have hurt the company for a couple of reasons. First, consumers were so eagerly awaiting the Apple alternative, frustration reigns as the company continues to leave consumers unfulfilled. Secondly, with the iPad 2 out, expectations are limited (to be kind) for Playbook.

Going Forward

Management's emphasis on 4G technology, RIMM's recognized commitment to R&D and new Blackberries coming that will almost certainly be built using the faster, more reliable QNX Operating System has insiders drooling, in spite of the Playbook hiccup.

In Closing

Great margins, outstanding earnings, and projections going forward that put much of the market to shame, in addition to being one of the least expensive large cap stocks on the NASDAQ, provides compelling arguments for getting in, and getting in now. It is not at all unreasonable to assume Research in Motion becomes a $70+ stock before the year is out. It’s simply too cheap, at a time when value is becoming harder to find.


 

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