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Is Now the Time to Buy BlackBerry (TSX:BB) Stock?

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As one of Canada’s most well-known tech stocks, BlackBerry (TSX:BB) has had a very interesting and dynamic history. Since the days of being solely a handset and phone business, BlackBerry has undergone a transformation. Today, as a provider of mobile telecommunications solutions to a broad range of industries, from the healthcare industry to the automotive industry, BlackBerry is on a mission to lead us to a connected world that is trusted and secure.

BlackBerry stock has not fared well and has plummeted 26% in the last year, as revenue growth has been disappointing, and as investors wait to see more proof that the company’s acquisitions will, in fact, boost growth significantly.

Setbacks, speed bumps, and a general lack of visibility in its new segments notwithstanding, let’s take a look at the reasons why BlackBerry stock should be on your shopping list or at least on your radar.

A great emerging tech play

BlackBerry operates primarily in four different segments.

The Enterprise and Software Services segment (ESS) provides core software offerings, including its Enterprise Mobility suite, BlackBerry’s secure communications platform, which accounts for 31% of revenue.

BlackBerry Technology Solutions (BTS) includes its automotive software technologies, including the QNX platform, which intends to take driver assistance and safety systems to the next level by building next-generation systems; it accounts for 20% of total revenue.

The company’s licensing/intellectual property segment accounts for 27% of revenue, and this is where the company’s global patent portfolio is managed and monetized, providing it with a competitive edge as it protects its technologies as well as monetizes them through licensing agreements.

Lastly, Cylance, which accounts for 19% of total revenue, is BlackBerry’s $1.4 billion next-generation cybersecurity provider acquisition, which elevated BlackBerry’s game in the fast-growing cybersecurity industry. This was a good move, as this industry will see explosive growth in the next few years, as more and more machines are connected and as the Internet of Things industry hits its growth projections of more than doubling by 2021 (relative to 2017 levels).

Latest results out of BlackBerry were mixed, with some good and bad points. Revenue growth was 23%, including the Cylance acquisition, but the ESS segment was flat, and revenue growth in the BTS segment was a disappointing 16%, although design wins were strong, which points to better future growth rates.

Cylance was a highlight, as revenue increased 31% year over year, which demonstrates the growth potential.

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A strong financial position

BlackBerry still stands out as having a healthy balance sheet, which gives the company a base to build and grow on.

Net cash currently stands at $360 million, and while this is down from $1.7 billion last year due to the Cylance acquisition, this balance is still healthy, representing $0.65 per share. Debt to capital is also healthy at 20%.

Strong growth potential

For fiscal 2020, management continues to anticipate revenue growth of 23-27%, with Cylance and BTS both seeing momentum.

To be sure, BlackBerry is in early stages of its growth mission and its transformation. But for investors who are willing to put some money into a stock that has great upside potential as it capitalizes on this new, connected world we live in today, BlackBerry is a good option.

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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 Karen Thomas has no position in any of the stocks mentioned. The Motley Fool owns shares of BlackBerry. BlackBerry is a recommendation of Stock Advisor Canada.

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