What should you do this afternoon? Buy RIMM, of course.
No, I’m not clinically insane; I truly believe that RIM will post a positive return on its current share price of $61 by the end of 2011. In fact, let me attach tangible numbers to this prediction: RIMM’s 52-week high for 2011 will be at least $80 – a return of more than 30 percent if you buy at its current trading price.
Why will it go up?
Research in Motion is not nearly as “dead” as everyone claims. It’s not even close. First, it still dominates the loyal enterprise market with its BlackBerry product line and neither major competitors – Apple’s iPhone and Google’s Android platform – are equipped to tackle the needs of large organizations. For this, RIM’s performance will remain, at the very least, stable.
Second, the PlayBook is a very impressive machine. When it is released, it will be bought. Maybe not in swarms like the iPad, but it has a legitimate shot and claiming the number two slot. It also has, more importantly, the potential to entice enterprises to dive into the tablet realm – again, an area where RIM will dominate against competitors more focused on average joes than businesspeople and corporations.
Research in Motion has a strong core and is still clearly motivated to be a leading competitor for the foreseeable future. The iPhone and Android are still “new,” and as their shine dulls, and yet other phones enter the already saturated market – such as Windows’ second attempt – it will become evident who has real long-lasting value. BlackBerry among them.
Why is it down?
Research in Motion’s stock price has been battered by overly negative criticism and hyped-up harbingers of illusionary death spirals. At its current 52-week low of $42, it was ridiculously cheap. At it’s current price of $61, it’s not a steal, but it’s still a profitable short-term investment.
People are overlooking its stability, and far too early claiming an irreversible decline. Consider this: RIM has two CEOs and numerous variations of its BlackBerry to satisfy every type of consumer, enterprise or otherwise. It has a savvy forthcoming tablet on a new OS and has long led the industry in technical prowess. While iPhones and Androids may supposedly be more “intuitive,” BlackBerrys simply work. And while Apple and Android are still growing mobile user bases rapidly, there are an increasing number of people who refuse to enter Apple’s “distortion field,” and Android fragmentation is becoming a widespread concern. Apple is a bubble waiting to burst because Apple is Steve Jobs. Steve gets sick, Apple’s stock plummets. Plus, there is consumer fatigue over Apple’s high levels of secrecy, high product prices, and of course its deliberate withholding of features (such as the iPad without cameras).
Research in Motion is currently under-priced and is poised to make a comeback. BlackBerry smartphones will remain stable and the PlayBook will give the company a boost. Buy RIMM at $61 or less during January and sell when it hits $80 in the summer or fall.
Disclosure: I am not currently a shareholder of Research in Motion.