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Here’s Why BlackBerry (TSX:BB) Is a Great Buy in July

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BlackBerry (TSX:BB)(NYSE:BB) stock rose 2.36% on July 9. Shares suffered a sharp dip after the release of its first-quarter FY 2020 results. Earlier this month, I’d recommended investors look to add the stock at the single-digit price point.

Shares of BlackBerry have dropped 23% over the past three months. Value investors who’d scooped up the stock in January may have taken profits back in the spring, but they would be wise to consider re-entry in July. For investors with a long time horizon, BlackBerry remains a very attractive option.

BlackBerry reported a decent quarter across the board in late June. Revenue rose to $247 million compared to $213 million in Q1 FY 2019. Its adjusted profit climbed to $0.01 per diluted share, which was in line with analyst estimates. Cylance, the recently acquired California-based firm, contributed its first full quarter of revenue in Q1 FY 2020. This amounted to $32 million in the quarter.

CEO John Chen stated that Cylance’s integration was ahead of schedule. Sales from the acquisition are ramping up slowly, but the divergent markets of the two companies were expected to generate some challenges in this area. He is projecting a boost to revenue when the product roadmaps are brought into harmony.

BlackBerry reported solid momentum for Blackberry Radar, an asset-tracking solution that provides visibility to a broad range of fleets. Chen said the company added 20 new customers for the solution in the quarter — one of them a “top three U.S. retailer.”

The company reaffirmed its non-GAAP revenue growth guidance of between 23% and 27% for the full year. It forecasts BlackBerry Cylance non-GAAP revenue growth between 25% and 30%.

In a previous article, I’d discussed why BlackBerry’s footprint in specific sectors bodes well for its growth going forward. This is worth revisiting as we kick off the second half of 2019 and prep for the next decade. Cybersecurity Ventures recently projected that global spending on cybersecurity will exceed $1 trillion cumulatively over the five-year period from 2017 to 2021. BlackBerry has won significant private and public contracts in recent years, notably with the U.S. State Department in 2017.

BlackBerry’s QNX technology is now in more than 150 million cars worldwide, according to Strategy Analytics. This is up 25% from the prior year. A spring 2019 report from Global Market Insights forecasts that the automotive software market will surpass $52 billion by 2025. This represents a CAGR of 19% between 2019 and 2025.

Investors looking to jump into BlackBerry this summer are positioning themselves to bet on BlackBerry’s growth trajectory, which should be boosted by its position in these thriving markets. The stock has a price-to-earnings ratio of 36 right now, which should affirm its speculative status for those looking long term. Shares had an RSI of 32 as of close on July 9. This puts BlackBerry stock just outside technically oversold territory at the time of this writing. I’m bullish on BlackBerry below the $10 mark. It’s a buy for me in July.

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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 Ambrose O'Callaghan 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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