BlackBerry (BBRY) was selected as the turnaround stock of the year by Stock Traders Daily at the end of 2013, and this article serves as a review of that recommendation and an update. The recommendation to buy BlackBerry began with a client only special report that detailed expected market action in calendar 2014. The special report was issued in December, 2013, and in that report BlackBerry was selected as the turnaround stock of the year.
This recommendation to buy BlackBerry was subsequently made public before the end of 2013, and although the public disclosures were made when BlackBerry was already at higher prices, the returns from those public disclosures are still quite significant.
From December 28, 2013, when this trading call was made public, BlackBerry increased by 48%. Between then and now important changes and developments have taken place on a company-wide basis, but additional trading recommendations also were made by Stock Traders Daily.
Specifically, clients who owned BlackBerry near $7.00 a share were advised to sell 1/2 of their position when the stock was near $11.00 a share. From there, clients were advised to hold on to that remaining position. Currently, we continue to advise clients to hold on to that position.
The developments that have taken place on a company-wide basis can be best quantified by looking at the trajectory of earnings and revenue. After experiencing an aggressive decline, both EPS and revenue have stabilized, and although we have not yet witnessed the growth phase, the process of turning around this company is clearly underway.
Prior management made horrible decisions and turned both customers and investors away from BlackBerry, but since then the process of turning around the company has begun and the first step in that process is stabilization.
Management and company-wide operations have successfully stabilized both EPS and revenue and have put the company on track to continue the turnaround process; the next step is growth!
According to our real time trading report for BlackBerry we should still be holding the stock but for clients who have followed our instruction the cost basis for their remaining position, after including the gains from the prior 1/2 position, is close to $4 so we also have significant downside risk protection in this trade. We are not recommending BBRY at these levels.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: By Thomas Kee for Stock Traders Daily and neither receives compensation from the publicly traded companies listed herein for writing this article.