BlackBerry (TSX:BB) Stock Price: Could Shares Double in October?

BlackBerry (TSX:BB)(NYSE:BB) saw its stock price collapse following the COVID-19 crisis. But there could be heavy upside in the months to come.

| More on:

BlackBerry (TSX:BB)(NYSE:BB) stock is at a crossroads. In one future, shares could rise significantly. In the other, the stock continues its multi-year decline.

There’s actually reason to believe this stock will rise in the near future. Several catalysts are lining up right now.

The timing is right

Software is king. It has superior economics than hardware, and can scale thousands of times faster. If you want to make a ton of money quickly, software stocks should top your buy list.

But what does software have to do with BlackBerry? Doesn’t the company make old-fashioned smartphones?

Many are surprised to learn that BlackBerry no longer makes smartphones. The company just finalized a three-year turnaround completely focused on cybersecurity software. When it comes to software, this market is especially lucrative.

Every day, the world adds millions of new endpoints to the internet. New phones, smart watches, computers, tablets, washing machines, vehicles, tracking devices, and more. All of these products are vulnerable to hacking.

Hacking can be annoying and expensive to remedy, but it can also be deadly. Consider a connected car, like one with automated lane assist. If this software were hijacked, the results could be catastrophic. The downside grows even further with self-driving vehicles.

Manufacturers and consumers already shell out hundreds of billions of dollars per year to protect endpoints, but the market is expected to grow consistently over the next decade beyond. BlackBerry is in position to capitalize.

This isn’t an early-stage play. The company already has amazing tech, like its Cylance division, which uses AI to detect threats before they’re executed. Its QNX platform uses Cylance to protect autonomous vehicles. That platform is already embedded in nearly 200 million vehicles worldwide.

Bet on BlackBerry

Cybersecurity software stocks have already taken off. Just look at Crowdstrike Holdings, which trades at 44 times earnings. The industry will grow rapidly for years to come, and the market knows it.

BlackBerry is a notable exception. Shares 2.7 times sales, roughly 10 times less than the industry overall. A simple reversion to the industry mean would result in big upside.

What’s preventing BlackBerry stock from taking off? Much it has to do with perception. Many people still classify this stock as a hardware manufacturer. That misconception prevents the valuation multiple from matching its peers.

The other issue is that the company just finalized its turnaround. For years, revenue was in secular decline. The market is clearly in “prove it” mode, waiting for organic growth to return before pumping the stock.

It appears that milestone has just been reached. Last week, the stock popped 10% after Q2 results came in surprisingly bullish. Total revenue grew 2%, with recurring software sales comprising 90% of sales.

“We are pleased to report sequential and year-over-year revenue growth this quarter, exceeding expectations,” said BlackBerry CEO John Chen. “Continued QNX design wins and significant cybersecurity partnerships position the business strongly for the future.”

The market was waiting for a signal to buy BlackBerry stock. October could be the exciting month investors were waiting for.

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.

Tom Gardner owns shares of CrowdStrike Holdings, Inc. The Motley Fool owns shares of and recommends CrowdStrike Holdings, Inc. The Motley Fool recommends BlackBerry and BlackBerry. Fool contributor Ryan Vanzo has no position in any stocks mentioned.

More on Tech Stocks

A person uses and AI chat bot
Tech Stocks

AI Where No One’s Looking: Seize Growth in These Canadian Stocks Before the Market Catches Up

Beyond flashy headlines about generative AI, these two Canadian AI stocks could deliver strong returns for investors who are willing…

Read more »

Data center servers IT workers
Tech Stocks

Better Buy: Shopify Stock or Constellation Software?

Let's dive into whether Shopify (TSX:SHOP) or Constellation Software (TSX:CSU) are the better options for growth investors in this current…

Read more »

nvidia headquarters with nvidia sign in front
Tech Stocks

Nvidia Just Delivered a Beat-and-Raise Quarter. There’s 1 Red Flag Investors Shouldn’t Ignore.

The chipmaker continued to benefit from robust demand for artificial intelligence (AI). But can it last?

Read more »

GettyImages-1473086836
Tech Stocks

Why Super Micro Computer Stock Is Soaring Today

The volatile stock is getting a boost from Nvidia.

Read more »

Snowflake logo in snowflake office on wall_snowflake-1
Tech Stocks

Here’s Why Snowflake Stock Skyrocketed Today

Shares of the data company are up 32% for the day.

Read more »

man touching magnifying glass button on floating search bar internet google search engine
Tech Stocks

Why Alphabet Stock Was Sliding Today

The parent company of Google is facing heat from U.S. regulators.

Read more »

chart reflected in eyeglass lenses
Tech Stocks

Top Canadian AI Stocks to Watch in 2025

Celestica (TSX:CLS) stock and another Canadian AI stock are worth watching closely this holiday season.

Read more »

Nvidia Voyager Headquarters
Tech Stocks

Why Nvidia Stock Rallied (Again) on Tuesday

The chipmaker is expected to report earnings this evening.

Read more »