Over the next couple of years, you could make triple-digit gains in one of the world’s most beaten-down stocks: BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY).
No, you won’t get rich overnight. But hidden strengths could help this company rebound to profitable heights. Before the run is over, we could see the stock price double or more.
Let me explain…
Is Blackberry about to hit $25?
New Chief Executive John Chen has been leading a quiet turnaround at BlackBerry, one that hasn’t received much media attention in recent months.
The company is no longer hemorrhaging cash. Since taking the helm at BlackBerry last year, Mr. Chen has slashed costs and raised much needed funds through asset sales. It’s safe to say that the company is once again on firm financial footing.
Revenues appear to be stabilizing, too. Sales have been in decline for five straight years. However, the launch of three new phone models—the Leap, the Passport, and the Classic—as well as the release of new enterprise products, are expected to put a floor underneath revenues.
This progress has been impressive, but it’s what BlackBerry might have in store next that’s really exciting. Last spring the company announced Project Ion: a series of initiatives designed to position BlackBerry for the emerging Internet of Things, or IoT.
In essence, the IoT is simply the connection of everyday objects to the Internet. Today, more than 99% of devices remain “unconnected.” But soon, just about everything you own, including your car, dishwasher, and bathroom scale, will be online.
BlackBerry wants to be the connective tissue in the larger IoT nervous system. Rather than creating the interface that consumers interact with, the company is building the infrastructure needed for all of these devices to talk to one another.
And the market here could be huge. For instance, networking giant Cisco Systems predicts that by 2020, the IoT will add US$19 trillion to the world’s gross domestic product. By then, more than 50 billion devices will be connected to the Internet.
No one else is better positioned to lead this revolution, either. The company’s QNX operating system is already counted on to run medical devices, nuclear power plants, and vehicle infotainment systems. Nobody can match BlackBerry’s reputation for security.
The smart money is bullish on BlackBerry. Should you buy, too?
Some of the world’s smartest investors are also bullish on the company’s turnaround.
According to recent SEC filings, billionaire investor Jim Simons disclosed a US$33.1 million stake in the stock. A number of other hedge fund managers, including Irving Kahn, Jeff Buick, and Francis Chou, have also been accumulating positions.
What’s interesting is that these investors paid between US$9-12 per share for their recent acquisitions—roughly in line with where the stock is trading today. That means you still have a narrow window to buy BlackBerry on the same terms as these Wall Street insiders.
I don’t expect that window to stay open much longer.
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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 Robert Baillieul has no position in any stocks mentioned.