With the Turnaround Firmly in Place, Don’t Miss Your Chance to Buy BlackBerry (TSX:BB) on the Dip!

After doubling in 2017, BlackBerry Ltd (TSX:BB)(NYSE:BB) stock has given back some of those gains and now trades 30% below its 52-week highs. Find out why now might be a good time to pick up this newly-transformed technology leader on the latest dip.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

After an encouraging 2017 that saw the value of its stock more than double, BlackBerry (TSX:BB)(NYSE:BB) shares have given back some of those gains for far in 2018 and currently trade more than 30% down from their 52-week highs.

With CEO John Chen’s ambitious turnaround strategy taking firm hold of the Waterloo-based software company, now might be an opportune time to initiate a stake in the embattled technology company.

Chen took the reins of smartphone maker BlackBerry back in 2013, and frankly speaking, his success in turning the company around has been nothing short of remarkable.

Chen came to the table with a reputation for turning around failing companies.

In 1998, Chen came on board struggling enterprise services company Sybase, which at the time was facing an existential crises from intensifying competition from the likes of tech giants such as Oracle Corporation and others.

At the time, when Sybase was reported to be worth less than US$400 million, some analysts were giving the company less than a 35% chance of surviving.

However, thanks to Chen’s efforts, he was able to turn the company’s fortunes around, eventually selling the firm in 2011 for US$5.8 billion, realizing a 23% annual compounded return for shareholders during his time at the helm.

But while he hasn’t quite been able to replicate those returns for shareholders so far during his current tenure at BlackBerry, there are signs that brighter days are ahead for the $7 billion-dollar Canadian technology firm.

A cursory look at the company’s recent performance might tell a different story, but in the case of transformative turnarounds like the one Chen is currently overseeing at his firm, sometimes a deeper level of analysis is warranted.

For example, while sales in the most recent quarter were down more than 9% over the year ago quarter, that figure fails to account for the fact that sales of handheld devices were down 88%, which accounted for most of the decline.

Meanwhile, licensing and IP (“intellectual property”) revenues more than doubled over the same period.

Given the strategic pivot at BlackBerry away from being a smartphone maker and placing more emphasis on software and security solutions, these numbers should be expected and probably even encouraged.

Devoting its efforts toward technology applications that are not only more scalable, but also less capital intensive than hardware manufacturing have helped to drive its gross margins to new heights.

And taken in light of the massive potential for the “Enterprise of Things” (EoT), which is exactly the market that Chen is going after, the leading-edge technology that BlackBerry is already providing to many of the world’s largest firms mean that the 2017 rally in BlackBerry stock could be just the beginning of something bigger.

Where do you stand?

Let’s not forget the underlying perception facing BlackBerry in the public markets today.

Following a historic collapse that saw the smartphone maker become absolutely dominated by the likes of Apple Inc. and later Alphabet Inc., BlackBerry became a laughing stock of the investment community for its lack of ability to keep up with the pace of technological innovation, not the least of which was stubbornly sticking to a physical “QWERTY” keyboard.

Not to mention that the cynics will be quick to point out that the current turnaround story is now in its fifth year.

However, those who have remained loyal and stuck with the company — allowing Chen to see his vision through — have been rewarded for their patience now that the stock is 85% higher than its December 2013 lows heading into Tuesday’s trading.

Earlier this year, shareholders announced that Chen will remain as the company’s CEO through 2023, allowing him ample time to continue to execute on his vision to make BlackBerry a leading enterprise software company into the next decade and beyond.

Stay Smart. Stay Hungry. Stay Foolish.

Should you invest $1,000 in BlackBerry right now?

Before you buy stock in BlackBerry, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and BlackBerry wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $18,750.10!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 35 percentage points since 2013*.

See the Top Stocks * Returns as of 1/22/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Fool contributor Jason Phillips has no position in any of the stocks mentioned. David Gardner owns shares of Alphabet (A shares), Alphabet (C shares), and Apple. Tom Gardner owns shares of Alphabet (A shares) and Alphabet (C shares). The Motley Fool owns shares of Alphabet (A shares), Alphabet (C shares), Apple, BlackBerry, and Oracle and has the following options: long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, long December 2018 $52 calls on Oracle, and long January 2020 $30 calls on Oracle. BlackBerry is a recommendation of Stock Advisor Canada.

If You Thought Apple and Microsoft Were Big, You Need to Read This.

The steel industry produced the world's first $1 billion company in 1901, and it wasn't until 117 years later that technology giant Apple became the first-ever company to reach a $1 trillion valuation.

But what if I told you artificial intelligence (AI) is about to accelerate the pace of value creation? AI has the potential to produce several trillion-dollar companies in the future, and The Motley Fool is watching one very closely right now.

Don't fumble this potential wealth-building opportunity by navigating it alone. The Motley Fool has a proven track record of picking revolutionary growth stocks early, from Netflix to Amazon, so become a premium member today.

See the 'AI Supercycle' Stock

More on Tech Stocks

data center server racks glow with light
Tech Stocks

Why Hive Could Be the Best Stock to Buy in January 

Bitcoin is trading at its all-time high. However, Hive’s stock continues to trade in the lower range, creating a buying…

Read more »

Rocket lift off through the clouds
Tech Stocks

Could MDA Stock Deliver Big Returns Over the Next 5 Years?

Besides surging demand for space technology, its proven execution capabilities could help MDA Space stock deliver solid returns over the…

Read more »

e-commerce shopping getting a package
Tech Stocks

Why Shopify Could Be the Hottest TSX Stock in 2025

Shopify (TSX:SHOP) stock could lead the TSX higher this year!

Read more »

think thought consider
Tech Stocks

Where Will Celestica Stock Be in 3 Years?

Here’s why I wouldn’t be surprised if Celestica stock maintains its solid upward trajectory over the next three years.

Read more »

Investor wonders if it's safe to buy stocks now
Tech Stocks

Billionaires Are Dropping Apple Stock and Buying This TSX Stock in Bulk

Let's be clear: there's nothing wrong with Apple stock. But investors may not get the value they can from this…

Read more »

data center server racks glow with light
Tech Stocks

OpenText Stock: Buy, Sell, or Hold in 2025?

OpenText is a TSX tech stock which trades at a cheap multiple while offering a tasty yield to shareholders in…

Read more »

Income and growth financial chart
Tech Stocks

This TSX Stock Has Already Soared 151%: Can it Double in 2025?

Whether MDA stock doubles again in 2025 will depend on consistent execution and broader market conditions, but it certainly seems…

Read more »

e-commerce shopping getting a package
Tech Stocks

Opinion: This Is the Only TSX Growth Stock to Own for the Next 5 Years

Here's why Shopify (TSX:SHOP) looks like a top growth stock worth owning over the next five years on a relative…

Read more »