Friday, December 12, 2008


I think that investors have gotten a little crazy with RIM stock. It plummeted on Sept 22nd from a 52 week high of $150.30 to a current close today of $48.49 CND.

Ok... I think that the stock was *way* overvalued before. However, I think investors have gotten a little crazy offloading the stock (the P/E ratio has dropped to 12.67 - Source: Yahoo Finance @ Friday Dec 12). I think that the Financial Crisis (and RIM's "negative" news) has made people a little emotional when it comes to stock. I think that given the circumstances, the stock *might* drop as low as $38.34 if people continue to panic, but I'd like to think that smart investors will start coming in and preventing it from falling too far below it's intrinsic value.

The fundamentals of this company are still good. Although they've downgraded their earnings for the next quarter based on general economic weakness in the US, I think that it's still a strong growth company (deserving a P/E of around 15 or more). Plus, given that their EPS is technically still growing (just at a slower rate), I don't think the panic is entirely justified.

Check out the Roger's commercials. It almost seems like 75% of all the phones are BlackBerry's (Bold, Flip, Storm). Having said that... It seems like RIM will do better than most companies in the same space (which doesn't say much as most companies will probably suffer).

Based on all that... If I had to put a stake in the ground... I would buy the stock if it fell to $45 CND and sell it if it went up to $56 within the next six to twelve months - two to four quarters (it might slowly start growing again after that... But if you are looking to make a *relatively* quick buck with *relatively* low risk - the stock seems to have bottomed for now... or approaching it). That's an almost 25% holding period gain. In short... I'd rate this stock a "Hold" for now. If investors get any more panicky (if the stock drops another few percent) I'd rate it "Buy".

Keep in mind... Even though I think the stock *SHOULD* be worth $56... The market (being emotional and even irrational during this stressful crisis) *may* not agree until later. Either way, I think this stock is undervalued and poised to make a recovery... *Eventually*.

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