Is BlackBerry (TSX:BB)(NYSE:BB), Canada’s original tech superstar, a good buy at these levels? This former Canadian superstar’s stock was smashed almost a decade ago and has never recovered to its former glory. In spite of all the positive aspects this stock has to offer, it simply cannot seem to gain any ground.
This stock has languished at its lows for almost a decade now. Every time it seems to gain some ground, it gets hammered back to Earth. It has been a soul-crushing investment. At this point, is BlackBerry a good buy, or is it dead money?
The value stock with everything going for it
Honestly, if ever there was a value stock that seems like it should be a good buy, BlackBerry is the one. It is a tech stock operating in growth areas. It has a solid balance sheet in a net cash position. There is everything to like about this company, but for some reason, it is not performing. This stock has been dead money for years.
I thought when the company started focusing on software services a few years ago, it would have started to make some progress. Just under a decade ago, BlackBerry was getting trounced by the iPhone. It made what was a wise decision for the time and got out of the hardware business.
Instead, BlackBerry decided to focus on cybersecurity. This was the area it had been known for and seemed to be a no-brainer move for BlackBerry. It also began working on Internet of Things (IoT) solutions, a growing industry that has continued to expand. Another move for the company has been to build its driverless car segment. None of these have added up to success for BlackBerry.
BlackBerry has lofty goals that it might be able to accomplish. It aims to be the must-have software provider for endpoints, the end of a communication channel. In other words, BlackBerry wants to be the go-to provider for protecting attacks on computers and other devices.
So, where is it with this? Well, BlackBerry is actually doing quite well. As of its 2020 annual general meeting, which was just held in June 2020, BlackBerry announced a four-year compound annual growth rate for its revenue of 19.4%.
Its customer base is very impressive. 18 of the G20 governments use its services. It protects over 175 million vehicles, and 77% of fortune 100 financial companies are customers. These are great stats.
Balance sheet strength
Another factor that has helped to strengthen its balance sheet is the fact that it does not pay a dividend. This lack of a payout has helped the company conserve cash during bad times, although it hasn’t been especially comforting for those who have held the stock without any return on their investment over the years.
The bottom line
BlackBerry has a lot going for it. It has great businesses, solid contracts, and a strong financial position. Despite these positive aspects, the stock price has gone nowhere for a decade. It has occasionally drifted higher, only to fall back. The thing is, this is a big ship to turn around that has made a massive move from a hardware phone maker to a cybersecurity company.
It may be a performer someday, especially if it gets traction on its innovative businesses. This company has a lot to offer. It might be a good idea just to put a few dollars into this stock and leave it. Someday, it might take off. From here, you could quite easily double your money. You likely won’t go a lot lower from here. Just be prepared to sit on the shares while you wait for them to move.
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Fool contributor Kris Knutson owns shares of Blackberry. The Motley Fool recommends BlackBerry and BlackBerry.