Some of you might know Blackberry Ltd. (TSX:BB) from the days when it was the leader in the handheld phone market. Others might know Blackberry from the 2023 movie that told the story of its rise and fall. Whatever you know it from, I believe Blackberry stock is worth considering, as it’s grossly underappreciated and undervalued .
Please read on as I go over why I think it’s a top stock to buy under $10.
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Blackberry rising from the ashes
It’s no secret that Blackberry’s stock price performance has been disastrous for more than 20 years. In fact, the stock has languished below $10 for much of that time. It was a rapid and shocking fall from grace that saw Blackberry fall from the top position in the handheld phone market. But as Blackberry accepted that it lost its position as the leader in handheld phones, it began to embark on completely transforming its business.
Other companies would have thrown in the towel, called it a day, and closed up shop after that spectacular fall from grace. But Blackberry shifted gears and ultimately abandoned the handheld phone business. In its place, the company focused its strengths and developed its internet of things (IoT) and cybersecurity businesses.
The new Blackberry
Today, Blackberry has once again transformed, letting go of its underperforming Cylance segment to focus on its QNX segment (formerly IoT). The QNX business is Blackberry’s machine-to-machine connectivity business – the engine of growth.
The company’s QNX operating system enables compute-intensive platforms like autonomous driving systems, and industrial robots. It’s trusted across a variety of industries such as automotive, medical devices, industrial controls, robotics, aerospace, and defence.
The renewed focus on the QNX business provides clear benefits. Firstly, Blackberry is benefitting from the cash received from the sale of its Cylance business. The $160 million received strengthened Blackberry’s financial position and allows the company to ramp up investment in the higher-growth QNX business.
Results highlight the potential
In its most recent quarter, Blackberry reported that the QNX backlog was $865 million. This compares to fiscal 2025 revenue of $535 million. This strong backlog highlights the demand that Blackberry is seeing in its QNX business, particularly in the automotive industry. In fact, the connected car market is growing exponentially. This is being driven by consumer demand for constant connectivity as well as safety and security goals.
As for Blackberry’s most recent results, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at $21.1 million. This represents a 15% margin and came in above expectations. Also, Blackberry’s operating cash flow came in at $57 million. This was also above expectations and it compares very favourably to prior years of losses.
Finally, the company recently announced a share buyback program, to buy up to 4.7% of outstanding float. Management believes that Blackberry’s stock price often trades at undervalued levels. The buyback will generate an attractive return of capital at these times. This demonstrates that management expects continued strong operating cash flow this year and continued balance sheet strengthening. This, along with its strong cash position of $337 million, is a positive signal that it’s a stock to buy right now.
