BlackBerry (TSX: BB)(NYSE: BB) stock has hit a wall at $15. The stock rarely showed any momentum beyond this price. After an 84% jump in the last week of May from $10 to $19, the stock momentum was slow in June. Some traders booked profits and sent the stock down 20% in the last 30 days. If you are looking to buy this stock at the current levels, get over BlackBerry.
The market has been pretty crazy this year and caused a lot of anxiety. It’s time to make peace with the market and buy long-term stocks.
Isn’t BlackBerry a long-term stock?
BlackBerry is a stock with potential. If you look at fundamentals, you will only see negative growth. But there is something about the tech you should understand. Tech is about a product that can scale and continues innovating and shaping the future.
BlackBerry has always been a company with great products. It fell because of failure to innovate first. Apple caught up and created a disruptive technology. But now, BlackBerry is emerging with future tech, and this time, there is no rest for the research and development (R&D) team.
BlackBerry vs. AMD: A 360-degree turnaround
Here I will take a detour. Remember the turnaround story of Advanced Micro Devices (AMD). It was generations behind Intel and Nvidia in chip technology. Its problem was delays in product launch and lack of proper roadmap. Like BlackBerry, even AMD had a tarnished image of offering outdated tech.
Lisa Su came in as the AMD CEO in October 2014 and brought discipline to the product launch. She leveraged product segmentation and marketing (creating the hype that even Apple uses) to ensure that one product is packaged in various ways, so they always have a product to launch.
John Chen, the CEO since November 2013, has been trying to create a BlackBerry turnaround story for the last seven years. Investors should have patience because its turnaround is 360 degrees from hardware for customers to software for enterprises.
Everything from the customer base to market to product has changed. In the case of AMD, it was an acceleration of product development and changing the go-to-market strategy.
BlackBerry now has a product roadmap. Its QNX platform serves most automotive companies, and the Spark platform serves large enterprises. The company is now foraying into automotive analytics with the IVY platform, which it plans to launch in early 2022. It remains to be seen how these products capture market share.
But this doesn’t mean you buy BlackBerry stock at $15. The right price is the one it can sustain, which is $10-$11. BlackBerry stock is a long-term hold if your cost is $11. Don’t try to time the short squeeze as that is unpredictable. I will reiterate, don’t buy BlackBerry anywhere above $11, hoping for a short squeeze rally. Instead, buy at $11 and hold for five-seven years.
Two stocks for some peace of mind
If you have burnt your hands in the short-selling temptation, consider a stable dividend stock like BCE (TSX: BCE)(NYSE: BCE). Both BlackBerry and BCE will ride the 5G rally. The 5G will change the way you connect to the internet. BCE is broadening the 5G footprint that will bring more subscription revenue in the long term as cars, drones, and cities connect using the 5G.
The stock has surged 12.6% year to date and offers a 5.65% dividend yield. The 5G revenue has just started, and it will grow gradually over the years. Even if the next big revolution of global satellite internet commercializes, it will co-exist with 5G and not cannibalize it.
Magna International can give you growth from automotive. Automotive and 5G are the two trends BlackBerry is hinging on. The difference is that it is tapping the software potential and BCE and Magna are tapping the infrastructure and hardware potential. Magna is manufacturing automotive and supplying hardware components to automakers and tech companies.
Final thoughts
BlackBerry has long-term growth potential. But Magna and BCE can give you peace of mind when BlackBerry struggles.
