Is BlackBerry Stock a Buy?

Here are the top reasons that make BlackBerry a great stock to buy today for the long term.

| More on:

Image source: Getty Images

BlackBerry (TSX:BB) is showcasing strength in 2023, as investors continue to add fundamentally strong growth stocks to their portfolios after last year’s sharp correction. BB stock currently trades at $5.23 per share with about 18.6% year-to-date gains. By comparison, the TSX Composite Index has risen 4.1% this year so far. Before I highlight some key factors that make BlackBerry stock a great buy for the long term, let’s find out what led to a sharp correction in its share prices last year.

BlackBerry stock

BB stock lost nearly 62.7% of its value in 2022. However, BlackBerry was not the only stock that witnessed a massive selloff last year, as most of its peers also tanked. For example, Canadian tech stocks Shopify, Dye & Durham, and Lightspeed dived by 73%, 63.4%, and 62.1%, respectively, in 2022.

This massive correction in the share prices of tech companies started after investors started fleeing risk amid rising macroeconomic uncertainties. Factors like high inflationary pressures, rising interest rates, and growing geopolitical tensions increased the possibility of a looming recession, raising concerns about tech companies’ feature growth prospects. This was one of the key reasons why most tech stocks, including BlackBerry stock, plunged sharply last year.

Notably, the Waterloo-based tech company makes most of its revenue from the cybersecurity segment. In the first three quarters of its fiscal year 2023 (the fiscal year will end in February 2023), its cybersecurity sales fell 7% YoY (year over year) to US$330 million. Besides macroeconomic worries, the recent weakness in BlackBerry’s cybersecurity segment revenue seemingly hurt investors’ sentiments and increased the pressure on BB stock.

What makes BB stock worth considering today?

The recent softness in BlackBerry’s enterprise cybersecurity software segment could mainly be attributed to macroeconomic concerns, which are forcing businesses across the globe to cut their costs. Nonetheless, the growth in its IoT (Internet of Things) segment still remains impressive. In the first three quarters of its fiscal year 2023, BlackBerry’s IoT segment revenue jumped 21% on YoY basis to US$153 million.

Clearly, the contribution of its IoT segment to BlackBerry’s total revenue is currently significantly less than the contribution of its cybersecurity segment. But I expect the IoT segment to be a major financial growth driver for the Canadian tech firm in the coming years with the help of its growing efforts to develop advanced technological solutions for futuristic mobility.

For example, BlackBerry has high hopes from its upcoming intelligent vehicle data platform, IVY, which it expects to be generally available in May 2023. The IVY platform will allow automakers to access in-vehicle sensor data in real-time to provide advanced functions and features to their consumers. Such artificial intelligence and machine learning-based data platforms will play a key role in futuristic self-driving vehicles. This is one of the key reasons why I expect the demand for its IVY platform to remain solid in the coming years, which should help BlackBerry’s financial growth to improve significantly.

Given its solid long-term growth prospects, I find BB stock highly undervalued right now, especially after it has lost nearly 35% of its value in the last year.

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 positions in and recommends Shopify. The Motley Fool recommends Lightspeed Commerce. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

More on Tech Stocks

A worker uses a double monitor computer screen in an office.
Tech Stocks

Better Buy: Shopify vs. Constellation Software

Are you interested in buying a tech stock? Find out which is the better buy between Shopify and Constellation Software.

Read more »

Woman has an idea
Tech Stocks

3 No-Brainer Stocks to Buy for Less Than the Cost of 1 Tesla Share

Are you confused as to whether to buy Tesla shares? Here are three no-brainer stocks that can give you exposure…

Read more »

Tech Stocks

1 Under-the-Radar Beneficiary From the Rise of ChatGPT

ChatGPT will benefit AI-enabled stocks like Docebo (TSX:DCBO).

Read more »

Businessman holding AI cloud
Tech Stocks

TFSA: 2 AI Growth Stocks for Your $6,500 Contribution

Here are two of the best AI stocks to buy in Canada in 2023.

Read more »

edit Colleagues chat over ketchup chips
Tech Stocks

The Best Stocks to Invest $50,000 in Right Now

You can create a portfolio of undervalued stocks with $50,000 right now. Here are three such stocks you can add…

Read more »

Tech Stocks

The Safest Semiconductor Chip Stocks to Own in March 2023

Canadians can invest in two safe semiconductor chip stocks, as the country prepares to expand its industry presence and become…

Read more »

Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks
Tech Stocks

Market Tremors: Buy These ETFs While Everyone Else Is Selling

The US bank crisis has triggered a sell-off raising the risk of a stock market crash. It’s time to buy…

Read more »

Two colleagues working on new global financial strategy plan using tablet and laptop.
Tech Stocks

Treasure Hunting South of the Border: The 2 U.S. Stocks I’d Buy Today

Expand the horizon of your TFSA portfolio south of the border. Here are two stocks that have the potential for…

Read more »