BlackBerry (TSX:BB)(NYSE:BB) continues to seem like it’s on the verge of shooting back to millennium prices. The stock once had an all-time high in the triple digits. Yet today, double digits seem like a win. But the stock could finally reaching the breaking point in 2021.
This is the year of the electric vehicle (EV). Yes, EVs have been around for ages. However, in the last four years under the Trump administration there were no real benefits to buying an EV. However, the new Joe Biden administration is seeking to change that, and then some.
President Biden announced he would be replacing about 650,000 federal vehicles with EVs over the next few years. On top of that, the president said he would hand out billions of dollars for green initiatives during his time in office. That includes EVs and could likely bring on board a number of large auto manufacturers.
One such manufacturer includes Toyota. Here’s where things get interesting for BlackBerry. Toyota came out with a statement that the company would be introducing electric and lug-in hybrid vehicles next year to its lineup. And what company does Toyota use for its software? You guessed it: BlackBerry.
This news is enormous, but is likely only the beginning. The company partnered with Amazon Web Services recently to improve the cloud-based collection and use of data within vehicles through BlackBerry’s Intelligent Vehicle Data Platform (IVY). Not only could this partnership make the company’s software better, it could lead to future partnerships as well.
The reason that we focus in on EVs is that these are likely going to be the next wave of cars under development by multiple car manufacturers. In fact, General Motors also recently announced it will aim to move its entire line of cars and trucks to vehicles that do not create greenhouse gas emissions by 2035. That’s an ambitious goal. If others take it on, BlackBerry could see a stratospheric rise in the use of its software.
BlackBerry stock still cheap!
Yet shares are still cheap given all this future growth potential! Sure, the recent news sent shares up. But now shares trade at about $15.85 as of writing. The growth that it could see through not just the Amazon partnership but its Toyota partnership is reason enough to expect massive growth.
The main downfall that BlackBerry has is competition for its enterprise software. It simply cannot compete with companies like Microsoft. However, this recent deal with Amazon could mean the company shifts focus and decides to zero in on zero-emission vehicles.
As for valuation, the company has a price-to-book ratio of 3.9 as of writing, and a relative strength index of 50, which basically puts it at fairly valued right now. But if you’re looking at growth potential, I believe this stock is therefore undervalued instead of fairly valued. Its earnings before interest, taxes, depreciation, and amortization for the last 12 months was $145 million, and analysts expect the next 12 months to be $165 million!
If you want a growth stock that could soar in the next year with the move to EVs, BlackBerry is the stock to go with. There is very little chance of the stock crashing in the next year and far more of a chance it could skyrocket with the move to EVs in the United States. If you’re an investor looking for a buy and hold to take advantage of EV stocks, then BlackBerry is the one for you.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. David Gardner owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon and Microsoft. The Motley Fool recommends BlackBerry and BlackBerry and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon.