Strong Buy Here?Metrics and prospects off RIM continue to look very good
1. P/E ratio = $59/(1.74 x 4) = 8.45 ??? (extrapolating last quarter earnings to full year)
2. $5/share cash on balance sheet, projected to rise to $7/share next quarter
3. no long term debt
4. Stock repurchases have reduced outstanding shares to 524 mil from 570 mil (Nov 09)
5. increasing sales and profits
6. Increasing subscriber base
7. should have technical support for the stock price in the ~$58 range
8. End of tax loss selling season
Future catalysts
1. Continued release of Torch to new markets
2. Potential upgrade of older models to new blackberry OS may be incentive for existing users to upgrade
3. Jan release of Playbook to North America, Apr release other markets.
Disregarding the mystifying doom and gloom projections of "expert analysts",
a typical valuation for a tech company with growing sales, profits, and cash flow, that has new products in the pipeline would probably be 12 to15 times earnings. Which would inply a price target of $84 - $105. Don't know if it will make it that high, but maybe $80? seems like a makeable number.
There is execution risk, a surprisingly high NASDAQ short position (28.5 mil as of Dec 15/10), and competitive pressures in this market, but current numbers seem to suggest that RIM is undervalued. I've probably got too many shares and am still accumulating. (bet big win big :)
All IMHO, do your own DD,