Why BlackBerry Stock Has Risen 20% in Q3 So Far

Despite its recent recovery, BlackBerry stock continues to trade with 30% year-to-date losses.

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What happened?

Shares of BlackBerry (TSX:BB)(NYSE:BB) are continuing to outperform most of its peers and the broader market this quarter. BB stock has recovered by about 20% in the third quarter (Q3) so far to $8.30 per share after losing about 14% of its value in the previous quarter. By comparison, the TSX Composite Index has seen 6.6% gains in Q3.

So what?

BlackBerry has been one of my favourite Canadian tech stocks in recent years, as it hasn’t seen much appreciation, despite its consistently improving long-term fundamental outlook. In the last couple of years, the demand for its enterprise cybersecurity solutions has risen sharply after the global pandemic-related restrictions accelerated the shift to digital commerce and encouraged remote work culture. In addition, the company has also been striving to develop advanced machine learning and artificial intelligence-based technological solutions for the automotive industry.

Earlier this month, BlackBerry revealed that China’s Hozon New Energy Automobile’s NETA Auto “has selected BlackBerry QNX technology to power its soon-to-be-produced futuristic sports sedan, the NETA S.” This development seemingly boosted investors’ confidence as the company’s expansion in the world’s largest auto market continues, triggering a healthy recovery in BB stock in the ongoing quarter.

BlackBerry’s better-than-expected May quarter results, released on June 23, could also be responsible for its third-quarter gains on Bay Street. During the quarter, its cybersecurity segment revenue rose 6% year over year, while its internet of things (IoT) segment posted a solid 19% jump in sales, exceeding analysts’ estimates.

Now what?

Despite its 20% recovery in the ongoing quarter, BB stock still trades with nearly 30% year-to-date losses. With this, the stock has erased all its gains seen in the last couple of years, despite its consistently improving fundamental outlook. Given that, I find BlackBerry stock way too undervalued, despite its recent rally, making it one of the best tech stocks to consider buying right now for the long term.

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.

The Motley Fool has no position in any of the stocks mentioned. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

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