The best time to buy a stock is shortly after it has been decimated, and then starts to recover. When investors think about stocks that are priced near $10.00 small dollar increments may not seem like much, but they translate into large percentage moves. This is exactly true with BlackBerry (BBRY), which also happens to be hour turnaround stock for 2014.
In December 2013 we issued a comprehensive game plan for 2014 that, in addition to market related observations, pinpointed BlackBerry as being the turnaround play of the year. At the time, the stock had officially cratered, Fairfax had given up, and the worst seemed like an inevitable truth. The stock was about $6.70 when we made this observation, and it is already up about 50% since then.
Recently, news has surfaced supporting demand for BlackBerry products in addition to other possibly much more compelling prospects that no one thought of last year. BlackBerry's messaging app has suddenly come into play given what Facebook (FB) has done with WhatsApp. For those who pay attention to BlackBerry, we know that they held talks with Facebook last year.
Obviously, we know that Facebook did not choose to buy BlackBerry, but anyone who did buy BlackBerry on the heels of that late year debacle last year is happy that they did. Given the changes that are taking place now we believe that the stock has the fundamental basis it needs to continue to increase, institutional investors seem to be back, and anyone who was given the opportunity to buy BlackBerry at $9.00 last year when Fairfax was shopping it around is second guessing their decision.
Additionally, I went on record in January after the stock went on a tear suggesting that it could stall before continuing to move higher. That stall happened, the stock has since stabilized and regained ground, and now it is approaching an important inflection level according to our real time report.
The trading report offered by Stock Traders Daily pinpoints resistance at levels not significantly higher than BlackBerry's current price, but in addition that report also proves that the stock never actually fell all the way to longer term support levels. Anyone schooled in technical analysis recognizes that consecutive tests of longer-term resistance levels without retracements to support in between often lead to breakouts.
By rule, we should never expect a stock to breakout until such time as it does, but our entry levels for BlackBerry are significantly lower than the current stock price, and I see no reason for any of our clients to dissolve their position. New buy signals are not surfacing in BlackBerry at this immediate moment, but if the stock breaks above longer term resistance as that is identified in our real time trading report for BlackBerry, they will. By rule, we are buyers when resistance levels break higher.