Making a Christmas List: Part V
A blackberry Pearl from Research in Motion (RIMM) is an excellent gift for anyone that wants to have their e-mail, calendar, contacts and more on the go. I mentioned that Apple is a great company but the Blackberry is all anyone carries in NYC (because it works so well with Microsoft and unfortunately, that is what everyone uses). If I had to guess, I would say that 7 out of 10 professionals carry some form of a Blackberry in the tri-state area (if not more).
Below is the case study I did for RIMM on April 8, 2004 when the stock was trading at $104.21 per share (now a split-adjusted $17.58). RIMM closed at $122.08 for a 594% gain in 3.5 years (if you or I was a holder the entire time).
I started coverage of RIMM during a “Piranha’s Weekly Market Watch” on January 11, 2004 at $76.25 or a split adjusted price of $12.71 (an 860% gain).
Of all the research I did for MarketStockWatch.com (while it was open prior to chrisperruna.com), my analysis of the start of the bull market has been my most proud accomplishment (and a piece of it can be read within the RIMM case study as well).
Chart of RIMM in 2004 (originally posted on MarketStockWatch.com):
CASE STUDY – FLAT BASE on top of FLAT BASE
RIMM – Research in Motion Ltd.
Industry – Telecom-Wireless EquipPiranha’s Weekly Market Watch – listed on 1/11/04 at $76.25
RIMM peaked yesterday at $111.35, a 46% gain in 3 monthsChart Legend:
1. The general market (DOW and NASDAQ) had a follow-through day and shows the first signs of a possible new bull market (March 2003). RIMM makes solid gains above the 50-day on the largest volume in almost 5 months. 50-day MA is starting to flatten from recent down trend. RIMM begins its first up-trend during the new hot market.
2. RIMM consolidates into a 7-week flat base (the min. number of weeks required to qualify for a flat base).
3. RIMM breakout of the flat base on the largest volume of the year. The second leg of this run is now underway.
4. RIMM decided to consolidate for a second time and forms another flat base, this one lasting 11 weeks – notice how the volume dropped during the building of this base – a very positive sign.
5. RIMM breaks-out on the largest volume EVER. Stock is up 50% this week on the second consecutive positive earnings report. (Posted on Piranha’s Weekly Screens soon after this powerful breakout).
6. Notice how the relative strength and volume have increasing during the entire run of the past 12 months – very positive.RIMM is currently showing some sideways action but is among some top leaders over the past 12 months – MBT and VIP.
I hope you enjoyed the case study.
So, how do I feel about RIMM today? The same way I do about all the stocks on my Christmas list: I should have bought and held during the bull market. The earnings are fantastic! Analysts revised their guidance for 2007 and the company still shattered the number (by 192%).
The stock is currently trading at the 50-day moving average for the third time this year, a line of support it has held since May 2007. Longer term, the stock is still in a very bullish up-trend that confirmed in September 2006 after the 10-week moving average crossed above the 30-week moving average.
I don’t own shares of RIMM at this time but it’s not a bad area (right now) to establish a position with a tight stop as we flirt with all-time highs. Ideally, I would like to accumulate shares near the 200-d moving average but the stock is currently trading about 40 points higher than that area.
Earnings:
FY 2005: $0.70
FY 2006: $0.84
FY 2007: $1.11 (beat estimates by 192%)
FY 2008: $2.17E (looking for a 95% jump next year)
FY 2009: $3.26E
ROE: 33.82%
ROA: 26.94%
P/E Ratio: 79.39
PEG Ratio: 2.18
I wonder what percentage of that gain was due to multiple earnings overnight gaps? These charts over the past 2 or three years are very deceptive. They look much cleaner than they actually were. Canslim bases are harder and harder to come by.
2 of those charts are Weekly’s I believe. So they tend to seem a bit cleaner, the daily on the bottom shows a little more volatility. Sometimes its good to check the weekly for an even bigger picture of the broad trend. But I agree with you, pretty volatile, RIMM has been great for trading volatility geared instruments.
I picked up some NTDOY, a very speculative play, since I dont even follow the Nikkei very much, but I put a nice tight stop on it. So it should be good for some entertainment at worst! =)
Chris I should also mention that the blackberry also works very well with the Mac. I use a curve and sync my iCal, Gcal and gMail. Its even easier than ActiveSync.
The iPhone is nice but cant replace my BB Curve just yet.
Ty,
I didn’t know that because I am still 100% a windows user (go figure since I have a design background).
BTW, I am going to try to focus on stock research once again in December (on the blog).
That would be awesome! thanks Chris for all your hard work, it is some of the best coverage on the net in an easy to digest format. I know all the readers of this blog appreciate it!
RIMM seems to have lots of people betting against it. A lot of people think that the Blackberry is vulnerable, but it continues to do extremely well and prove people wrong.