Against the Grain: RIMM Stock Nearing the Buy Zone

Andrew Nyquist

By Andrew Nyquist
I know, the story is tragic, and the company is a mess.  Since 2008, Research In Motion (RIMM stock) has been involved in a slow motion car crash.  Totally and utterly unprepared for smartphone competition and the resulting dynamic change, the Canadian company has watched its stock drop from over $140 in 2008 to a $20 bill today.  Ouch!  Or rather, OUCH for the stubborn shareholders that held on – may they learn something about a “stop loss.”  Apparently Apple’s (AAPL) iPhone and iPad weren’t scary enough…

So, what in the hell am I doing writing about RIMM stock you ask?  And what on earth possessed me to use the word “buy” in the title?  Well, it wasn’t easy.  Personally, I think their phones are boring and management has done a poor job of maximizing value and business opportunity.  I spend more time venting about my phone than I do talking into it.  Yet, I still want to buy the stock… Yes, want.  Haven’t bought it yet, but eyeing it up as a short to mid-term (< 6 mos.) trade idea.  My reasoning for is both fundamental and technical (as in stock chart technical!).

Consider the following:

1)  Stock Technicals: RIMM stock is nearing mult-year support in the 17-20 dollar range

2)  Value and Value:  RIMM stock is close to becoming a teenager and book value is around 19.  The brand is well recognized (for better or worse) and management is due for a shake up.  The company also has no debt and a billion in cash.

3)  It’s a Contrarian’s Delight:  The aura surrounding the stock is so negative that any bit of decent news could spur a rally (i.e. a shake up in management, prospective licensing/software deal, or news of a possible acquirer)

Again, this is for short to mid-term active investors.  Patience is key and purchases should be made in increments.   See chart below.

Research in Motion, stock charts, technical stock support

Have a great weekend.

 

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No positions in any of the securities mentioned at time of publication.

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