There’s no denying that BlackBerry Ltd. (TSX:BB)(Nasdaq:BBRY) has been quite the controversial stock. Many Wall Street analysts would argue that buying it is not only a bad idea, but potentially insane. However, these same analysts said the same thing a year ago. As 2014 went along, BlackBerry rose 60%.
I truly believe that BlackBerry is going to be one of the best companies to hold over these next few years. And I have three reasons for that.
BlackBerry devices are solid devices that have a niche. And that niche is what BlackBerry has finally realized it needs to target. The World Economic Forum in Davos, Switzerland, is currently going on. And there’s an interesting thing you see when there. Many people have both an iPhone and a BlackBerry.
The people at Davos are BlackBerry’s niche. The phone allows power users to cram through work—especially with that physical keyboard—and it’s also completely secure.
What I like about BlackBerry’s strategy here is the company only needs to sell 10 million devices a year to be profitable. That’s a niche it can fill. And we can see that it is attempting to do that by releasing the Passport and the Classic.
In the last quarter, software accounted for 8% of BlackBerry’s total revenue. I anticipate this is going to rise quite a bit over the next few years, especially if CEO John Chen’s plan of targeting the Internet of Things (IoT) works out.
BlackBerry has a program that it calls Project Ion, which is its attempt at breaking into the Internet of Things. The goal is to build a cloud-based platform that will allow companies to engage with the Internet. Think about it: a company that makes a refrigerator needs a system to support that device’s connection. Project Ion will be that.
There are CEOs around the world building up their IoT departments. Some argue it could be a $100 billion business. Others have said a trillion. But it’s clear that BlackBerry wants a taste.
Now this ties in to software, but it’s important to break it out because we can see a trend forming. BlackBerry used to only want to make its own phones. Now, though, BlackBerry is expanding into multiple platforms, which is something that I know I’ve argued for over the years.
It’s partnered with Boeing to create a new, secure, top-secret phone. This phone is so secure, there are no serviceable parts in it and should someone try to open the casing, it would trigger a self-destruct feature. The data, software, and entire gadget would be useless.
Then there’s Samsung Electronics. Beyond the takeover rumors, which I don’t buy, BlackBerry is going to be securing Samsung’s devices. That is a smart move by BlackBerry. If Samsung can brand its phones as state of the art and secure, that’s a huge advantage.
When to buy
I would wait to buy until these acquisition rumors die down. No one really knows if it’ll happen and the last thing I want is for you to buy a stock high and then watch it plateau for a while. And if the acquisition does happen and you miss an opportunity, there will be others.
Instead, we think the company below offers the perfect opportunity for you to start a position.
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.
Fool contributor Jacob Donnelly has no position in any stocks mentioned.