BlackBerry Ltd. (TSX: BB)(NASDAQ: BBRY) might have been the most debated stock in 2014. Could it be the most successful one for investors in the coming year? John Chen and his fans are on one of the wildest rides in Canadian stock history. Those who bought BlackBerry shares a year ago will be celebrating this New Year’s Eve as the stock has gained almost 60% in 2014. That’s not bad considering the S&P/TSX Composite Index is up by roughly 7%. Now, investors are wondering if 2015 will be remembered as the year that Chen burst out of the gate and never…
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BlackBerry Ltd. (TSX: BB)(NASDAQ: BBRY) might have been the most debated stock in 2014. Could it be the most successful one for investors in the coming year?
John Chen and his fans are on one of the wildest rides in Canadian stock history. Those who bought BlackBerry shares a year ago will be celebrating this New Year’s Eve as the stock has gained almost 60% in 2014. That’s not bad considering the S&P/TSX Composite Index is up by roughly 7%.
Now, investors are wondering if 2015 will be remembered as the year that Chen burst out of the gate and never looked back, or the year he almost pulled it off, but didn’t quite have enough gas in the tank to make it to the finish line.
Let’s take a look at some of the things that could drive BlackBerry even higher in 2015.
John Chen continues to move BlackBerry toward his goal of making the firm a software company. In the latest quarter, software represented just 8% of revenue. That number is set to climb moving forward as the company focuses on a number of key projects.
Much of the excitement revolves around the company’s plans to carve out a profitable niched in the rapidly expanding Internet of Things (IoT) market. BlackBerry’s Project Ion is using the expertise of its QNX group to develop a cloud-based platform that enables companies to easily and securely engage IoT. Companies know they need to be in the IoT space, but the sector is so new that they have no idea how to use the technology to make their operations more efficient. BlackBerry plans to be the partner that helps them.
If the pundits are right about the multibillion-dollar opportunities in the IoT space, BlackBerry’s stock could get a boost from positive news out of the Project Ion group in 2015.
BlackBerry is already making progress in the auto industry. Ford just unveiled its Sync 3 in-car technology that uses a QNX operating system. The company plans to roll out the product in North America next fall.
BlackBerry appears to be listening to customers who want products that are multi-platform friendly. The new collaboration with Samsung Electronics on a mobile-security venture is a good sign that BlackBerry understands that partnerships are the name of the game right now.
The latest version of the BlackBerry Enterprise Service Technology (BES 12) also has improved cross-platform capability that seamlessly supports Windows, Android, and iOS devices and is the first BES platform designed for IoT.
One other interesting change with BES 12 is BlackBerry’s move to subscription-based structure. This should help make software revenue more predictable.
Finally, a successful monetization of the 90 million BlackBerry Messenger (BBM) users could also be in the cards for 2015.
Handset sales came in below expectation in the latest quarterly report, but Passport orders are still strong and the recently released BlackBerry Classic is getting good reviews. Despite the focus on software, the handset division is still important. If the Classic can bring in both new and nostalgic buyers, 2015 could be the year that BlackBerry becomes cool again.
The biggest driver of the stock in 2015 should be profits. Despite weaker-than-expected revenue in the latest quarter, BlackBerry managed to achieve positive operating cash flow. With more than $3 billion in the bank, John Chen should have enough cash to get the company to the next stage.
Should you buy?
The company has good momentum right now. A lot of things still have to go right, but it is probably a lot safer to take a crack at BlackBerry now than it has been for quite some time.
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Fool contributor Andrew Walker has no position in any stocks mentioned.