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Still Long Way To Go For BlackBerry / Opportunity Is Coming

|About:BlackBerry Ltd. (BBRY)

Overview

BlackBerry (NASDAQ:BBRY) is a Canadian company and a leading maker of wireless smartphones. The company sells its product under the name of BlackBerry, that supports the global mobile voice and e-mail markets.

The closing price for the stock of BlackBerry as on August 05, 2013 is $9.58. In this analysis, we are not considering just 52 Weeks's history, but 5 year's history as well. The purpose to consider 5 year's history is to accommodate the lows and highs of the business cycle.

Stock Exchange Info

BlackBerry is listed on Dow Jones (NYSEARCA:NY) with ticker "BBRY". Its sector is information Technology and industry is Communication Equipments.

Historical Analysis

Table 1: High / Low Prices

Based on 52 weeks low ($6.22), the risk is $2.85 or 30% and opportunity is $8.74 or 91%. The ratio opportunity vs risk (52 weeks) is 3x. The historical analysis of 5 years is not useful for investing purpose since company's business has seen big swing in the last few years. Its price fluctuation is from $135 to $6.22. Company's 5 year price trend does not correlate with current market trend of BlackBerry.

Volume analysis

Average daily volume is 23.3M shares, which is equivalent to $223M based on the current price. This means that the deals that are equivalent to average of $223M, complete in one day. The maximum level of $2M is suggested for the investment to keep the liquidity high.

Analysis - Risk vs Opportunity

The Company's strength is its balance sheet. Its book value is $17.93 and its tangible book value is $11.22. Further, the stock price is $9.58 which is below tangible book value. The risk involved with the investment is moderate at this price value. Let us talk about the opportunity. BlackBerry's strength is the corporate sector which is untouchable by all the players in the market. So, I can say that Black Berry will get favourable responses once in the market from Nokia to Apple. Apple would like to purchase BlackBerry to make itself competitive to Android and enter into corporate sector. Android will also have same reason to buy the BlackBerry, While Nokia and Window are the other two players that might be interested in Blackberry. I am stating this as I feel that Blackberry still has value more than $11.22 which is its tangible book value. Even if the company decides not to go for sale, BlackBerry will introduce new model in the year 2013 to establish itself in the smart phone which is a very positive way to be competitive. Company's current CEO has gain some positive response from market.

Conclusion

I would suggest to take a conservative approach and buy Blackberry when the opportunity vs risk (52 weeks) ratio is 6x. the ratio will be 6x when the stock price is $8.00. $8.00 price will have risk of $1.78 and opportunity of $10.32.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Stocks: BBRY