In an industry that is powering forward, one company has been left behind.
Smartphones sales are exploding. In the last decade, these souped-up handsets have revolutionized how we communicate.
But BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY), which started this sea change years ago, has been kicked to the curb. Consumers have dropped their once beloved ‘Crackberry’ handsets in favour of Apple iOS and Google Android devices. As a result, BlackBerry shares have plunged 87% over the past five years.
Behind the scenes, new CEO John Chen is engineering something of a turnaround. The company is once again on solid financial footing and there are several catalysts that could send shares higher.
Here are three reasons why investors should be bullish on BlackBerry.
1. The smart money is buying
The world’s smartest money managers are backing BlackBerry’s turnaround.
According to recent SEC filings, billionaire investor Jim Simons bumped up his stake in the technology company last quarter. As of December 31, he owned 3.3 million shares valued at US$35.9 million.
And he’s not the only one. Last quarter, a number of hedge fund managers—including Irving Kahn, Nelson Obus, and Paul Tudor Jones—initiated or increased the size of their stake in the company. Billionaire money manager Prem Watsa also owns a US$512 million position.
2. The opportunity is enormous
Now, I have to ask you—what would have these money mavens so excited? I’d say it could mean only one thing: they see a giant opportunity ahead.
BlackBerry certainly hasn’t given up on the handset business. That said, this company isn’t really about phones anymore. CEO John Chen has his eyes on a much bigger prize.
BlackBerry sees a big opportunity in the emerging Internet of Things, the connection of people and things to the Internet. While there might be up to five billion handsets in the world, there are over 500 billion devices. And according to Cisco, this new industry could be worth up to US$19 trillion annually by 2020.
BlackBerry is becoming a key player in this industry. Simply put, the company wants to be the connective tissue in the larger Internet of Things nervous system, creating the infrastructure needed for all of these devices to talk to one another. And given BlackBerry’s reputation for security, no other company is better positioned to capture this market.
3. The stock is ridiculously cheap
For a company with this much upside, you would expect the stock price to fetch a large premium. That’s not the case with BlackBerry.
At today’s prices, the market is only valuing the company’s cash, patents, and service business. Mr. Market will throw in all the upside from BlackBerry Messenger, BlackBerry Enterprise Service 10, and the QNX operating system for free.
Bottom line, don’t let the “iSheep” scare you out of this stock. While the company is hated in the mainstream media, Mr. Chen is slowly turning the business around. That’s why this name could be the top stock in 2015 and beyond.
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Fool contributor Robert Baillieul has no position in any stocks mentioned. David Gardner owns shares of Apple, Google (A shares), and Google (C shares). Tom Gardner owns shares of Google (A shares) and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares).