BlackBerry (TSX:BB)(NYSE:BB) is arguably one of the most talked about Canadian tech stocks in 2021. Despite witnessing huge volatility on both sides, its bulls seem to be staying ahead. The stock has risen by 104% on a year-to-date basis, while it has risen by 39% in June so far.
Let’s look at some key reasons for its solid rally lately and discuss whether it’s still worth buying today.
BlackBerry stock rally
BlackBerry stock’s most gains this year could be attributed to its popularity among the members of some retail traders’ Reddit groups like WallStreetBets. It’s one of the key reasons why its stock rose by 113% in January. However, the stock couldn’t maintain these gains for long due to a big selloff it saw in February and March. As a result, it ended the first quarter with only 25% gains.
The Reddit traders have demonstrated their strength again in the last few weeks — taking BlackBerry’s share prices up by nearly 77% in the last 20 days. Apart from the ongoing meme stocks rally, BlackBerry’s improving fundamental outlook is also supporting its 2021 gains, I believe.
Change in business goals
BlackBerry’s smartphone business collapsed after the launch of the Apple iPhone and several other Android-based smartphones more than a decade ago. After losing its dominance in the smartphone industry, the Canadian tech company primarily started focusing on enterprise security software and services business. In the last few years, BlackBerry has also become one of the prominent players in the automotive technology industry — thanks to its QNX real-time operating system.
The overall trends in BlackBerry’s financials in recent years haven’t been really impressive. Nonetheless, its business segments like cybersecurity and automotive technology have the potential to exponentially grow in the coming years.
Improving fundamental outlook
The demand for cybersecurity solutions has already started surging in the last few years. Many large- and medium-sized businesses today are looking for software solutions to avoid the risks of data theft and make their online presence more secure. Being one of the most reliable companies in the cybersecurity field, BlackBerry’s cybersecurity solutions could drive handsome financial growth in the coming years.
Also, the company’s automotive industry offerings are expanding, as it’s currently focusing on developing advanced technological solutions for futuristic vehicles, including autonomous and electric cars. To accelerate this development, BB has partnered with global tech giants like Amazon Web Services and Baidu lately.
Is BlackBerry stock worth buying today?
While many critics might claim that BlackBerry stock’s recent rally is irrational, I don’t consider these gains to be completely baseless. The market gives more weight to a company’s future growth potential rather than the recent fundamental trends. BlackBerry’s significantly improving future growth prospects could be one of the key reasons for its rally in 2021.
BlackBerry stock has fallen sharply in the last few sessions after consistently rising in the previous couple of weeks. Long-term investors could consider the recent decline as an opportunity to buy this amazing TSX tech stock cheap right now.
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.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool owns shares of and recommends Amazon, Apple, and Baidu. The Motley Fool recommends BlackBerry and recommends the following options: long January 2022 $1,920 calls on Amazon, long March 2023 $120 calls on Apple, short January 2022 $1,940 calls on Amazon, and short March 2023 $130 calls on Apple. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.