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Should You Be Bullish on BlackBerry Ltd. This Holiday Season?

Shares of BlackBerry Ltd. (TSX: BB)(NASDAQ: BBRY) continue to be volatile, and investors are wondering if the stock is just a toy for traders.

Last week, news of a possible move into China and a mobile-security deal with Samsung Electronics Co. helped propel BlackBerry’s shares above $14. Four days later, the stock is plunging again and now trades near the $11.50 level.

Investors who put some BlackBerry shares in their stockings last December are sitting on nice gains. Should you follow last year’s lead and buy BlackBerry shares, or will an investment in BlackBerry right now weigh down the portfolio like a lump of coal?

Let’s take a look at the prospects for BlackBerry heading into the New Year.

Smartphones

BlackBerry is focused on being a software company, but its handset division is still important. The Passport initially sold out when it was released in September, and reports indicate the “phablet” targeted at enterprise customers is doing well.

The new BlackBerry Classic is set to hit the shelves just in time for the holidays. If consumers get into the holiday spirit and start adding the Classic to their wish list, the stock should get some support heading into January.

Software

A lot of interesting things are happening on the software side of BlackBerry. The Samsung arrangement shows BlackBerry is willing to do deals with its competitors. BlackBerry also has to work with CIOs who are trying to find secure ways to enable employees to use their own smartphones for work. The bring-your-own-device (BYOD) movement is here to stay, and BlackBerry must be a cross-platform company if it wants to succeed. The new version of BlackBerry’s mobile device-management software builds on some of the cross-platform functionality that exists in previous versions.

One interesting development is the company’s shift to a subscription-based structure for billing customers annually to use BES 12. The move should improve the reliability of the software division’s revenue stream.

Internet of Things

Another area of growth that investors should keep an eye on is the Internet of Things (IoT). BlackBerry CEO John Chen is excited about the company’s prospects for helping businesses enable their machines and equipment to securely send data over the Internet. The company’s IoT initiative, Project Ion, is using the expertise in its QNX Software Systems group to build a cloud-based platform that will provide businesses with the ability to efficiently and securely engage IoT. BlackBerry says the platform will be simple, secure, and scalable.

If IoT turns out to be as big as some pundits predict, BlackBerry only has to control a small part of the market to be successful.

Institutional support

John Chen is starting to inspire confidence in some conservative value investors who have very deep pockets. The Ontario Teachers’ Pension Plan recently increased its holdings in BlackBerry to 8.23 million shares. Canadian giant Fairfax Financial Holdings Ltd. already owns almost 9% of the stock.

Both the OTPP and Fairfax are known for making savvy long-term investments. In my view, it could be worth the risk to follow their lead this holiday season and give your portfolio a little BlackBerry gift.

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Fool contributor Andrew Walker has no position in any stocks mentioned.

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