BlackBerry (TSX:BB)(NYSE:BB) has been struggling over the past few years, losing close to half of its value during that time. Although the company’s transition from cell phones to cybersecurity and enterprise solutions has been slow and steady, investors haven’t been jumping on board with much enthusiasm.
In its most recent earnings report, revenue rose by 18%, but those type of results haven’t been consistent for BlackBerry. Although it did give the stock a brief boost, it wasn’t enough to get the stock back up over double digits. However, for investors that remain patient, there’s a lot of potential for the stock to take off, especially as concerns surrounding cybersecurity continue to climb.
Ransomware is a growing problem
A report released by Coveware in January found that the average cost of a ransomware attack has been skyrocketing. In the last quarter of 2019, the average cost of an attack was US$84,116, more than double what it was in the third quarter — US$41,198. Cybercriminals are focusing on large enterprises where the payouts can be significant, sometimes in the millions. And with data privacy a growing concern among consumers, no company wants to be the latest to announce a breach or that data wasn’t properly secured.
Not only can a breach hurt a stock’s price, but it can also jeopardize its future earnings as well if consumers are wary of doing business with the company in light of the risks. There’s a lot at stake, and that’s why a company like BlackBerry can have immense value to offer.
BlackBerry’s technology can reverse the attacks
One of the ways that BlackBerry can protect its customers from such attacks through a service it offers called Workspaces for businesses. Not only can business users easily share files with one another, but Workspaces also allows administrators to freeze accounts and roll them back to before a ransomware attack took place. It’s a valuable tool for business customers to avoid having to worry about shelling over millions of dollars to have their files reinstated.
Services like these are only going to become more of a necessity as breaches rise, and there’s pressure on companies to prevent these problems. These breaches aren’t going away, and companies of all sizes are going to need to better equip themselves, especially when they lack the technical ability in-house to have proper controls in place.
Why BlackBerry is a great long-term buy
BlackBerry is still struggling to win over investors, but the company is in a terrific position to benefit from the inevitable demand for strong controls and better security of sensitive information. And with BlackBerry already being a trusted name when it comes to cybersecurity, it could have an advantage over competitors in attracting customers.
Today, the stock is trading at less than two times its book value, and it could be an excellent buy for value-oriented investors as well as those who are looking for some growth potential as well. There’s a lot to like about BlackBerry, and while it may require some patience from investors, it could be a great investment to hang on to for many years.
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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 David Jagielski owns shares of BlackBerry. The Motley Fool recommends BlackBerry and BlackBerry.