When I look at Research in Motion (RIMM) all I can think of is the old phrase "Just when I thought it couldn't get worse, it did." RIMM is a stock for those of you that wished for a return to the good old days. Today you can buy the stock for the same price as you could in 2004. Bet you can't say that about houses, cars or gold. The graph below provided by Barchart shows the fortunes made and then lost by the holders of this stock over the past 10 years. Don't you wish you could relive 2007 - 2008 if you knew then what you know now.
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If you're still one of those holding on for the second coming I bet you'd like to know what everyone else is thinking.
Factors to consider:
Barchart technical indicators:
- 16% Barchart technical sell signal
- Trend Spotter sell signal
- Although trading above its 20 day moving average it is still below its 50 and 100 day moving averages
- The stock is 78.23% off its 1 year high
- Relative Strength Index 48.30%
- Barchart computes a technical support level at 13.68
- Recently traded at 14.07 which is below its 50 day moving average of 15.21
- During the market rally over the last 6 months the Value Line Index is up 14% while RIMM is down 39%:
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Fundamental factors:
- Almost every major brokerage firm has an opinion on this stock and 38 firms have assigned 50 analysts to determine just how bad it is
- Analysts project revenue will be down 5.40% this year and another 7.10% next year
- Earnings forecasts are not much better with an estimated decrease of earnings by 34.40% this year, an additional decrease of 32.70% next year and a possible compounded annual rate of increase of only 1.62% over the next 5 years
- These dismal projections resulted in no strong buy recommendations and only 2 buys from all these firms. 34 analysts recommend a hold, 9 under perform and 5 even advice investors to sell
- The P/E of 2.78 is about 25% of the market P/E and the stock pays no dividend
- I'm surprised the company still maintains an A+ Financial Strength ranking
- The management shuffle takes Balsillie and Lazarridis out of day to day management decisions but still leave them on the board where they can still direct major strategies including mergers and acquisitions - They want to protect all that stock they are holding
- Not only has the network experienced outages and technology problems but Apples iPhone and Google's Android have a better reputation and continue to eat into RIMM's market share
General investor interest:
- Even as the stock continues to tank and has lost the endorsement of Wall Street the individual investor as shown on Motley Fool continues to pray for the stock
- Of the 5,711 readers giving an opinion on the stock 78% of them actually think the stock will beat the market
- 74% of the more experienced and savvy All Stars agree with the general readership
- Fool notes that Barclays and Deutsche Securities have opposing views on the price direction
The market always has the final say and over the last 6 months RIMM is down 39% and even Nokia (NOK) is only down 10%. The clear winners in the sector are Apple (AAPL) up 43% and Google (GOOG) up 7%:
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Summary: What are Research in Motion's chances in the future? I think slim to none. The old management team has just shuffled around. The old dogs don't seem to have any new tricks up their sleeves so in the future it just looks like more of the same. Those of you holding can use the tax loss to offset gains from your other stocks that might be participating in the rally. Those considering might better be served looking at the many companies analysts project will have growing revenues and earnings. Short term traders might make a few bucks following the 14 day turtle channel for short term entry and exit points:
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Disclosure: I am long AAPL.
