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BlackBerry Ltd.: Has the Gravy Train Left the Station?

BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY) soared over 67% this past year thanks to the company’s smooth transition to become a software business. Infamous short-seller Andrew Left of Citron Research recently released bullish notes on BlackBerry, stating the company’s cutting-edge QNX operating system could be a “game changer” and that BlackBerry is an attractive takeover target.

The QNX operating system is an intriguing piece of technology for firms working on autonomous vehicles, and it’s possible that a company could scoop BlackBerry up over the next few months, but that doesn’t mean you should start loading up on the stock after its huge upward run.

It’s a risky proposition to invest in a company just because you think it’s a great acquisition target. Citron Research caused BlackBerry to soar to new highs, and it appears that all the great news is already baked in to the stock, so you’d be late to the party if you decided to load up on shares with the intention of selling following a takeover announcement.

Although QNX is considered to be one of the most secure operating systems for an embedded system, the technology is going to face a huge amount of competition in the coming years to become the software for the next generation of autonomous cars. Many large tech companies are working on alternative operating systems right now, and it’s really hard to say which one will come out on top.

The new and improved BlackBerry is here

Sure, BlackBerry made mistakes in the past, but the business model has changed, and the company is finding new ways to innovate with many promising projects, including QNX and a fleet-tracking radar service aimed at trucking businesses.

Consumer electronics was simply not in BlackBerry’s circle of competence. The management team’s sights are now aimed at selling products and services to other businesses, which I believe lies in the company’s circle of competence. For this reason, BlackBerry is an investible company again.

CEO John Chen deserves credit for bringing BlackBerry back to life. The software business has higher margins, and future success looks more likely given the promising growth prospects in the company’s pipeline.

Should you buy right now?

I think BlackBerry is a terrific turnaround story in the making, but I don’t think investors should be buying just yet. The stock has had an upward run of late, and a lot of volatility could be on the horizon. Many short-term thinkers have piled in to the stock with the hopes that BlackBerry will be taken over.

At this point, it looks like the gravy train has left the station, but if you’re patient enough, a better entry point may present itself in the coming months. I think BlackBerry is a terrific long-term play, but I’d advise caution if you’re thinking about being a buyer after such a surge.

Stay smart. Stay hungry. Stay Foolish.

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Fool contributor Joey Frenette has no position in any stocks mentioned.

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