BlackBerry Juiced 45% YTD: Only 5 ETFs To Play Rebound

By
A A A

After crushingBlackBerry 's ( BBRY ) shares for four years, investors are gorging on the beleaguered smartphone stock, sending it 45% higher so far this year.

Some analysts believe a multi-year turnaround led by former Sybase CEO John Chen, who took the throne in November 2013, will juice even bigger returns.

The tech giant, formerly known as Research In Motion, blasted 26% in just three sessions to a four-month high of 10.78 following major corporate news. Shares have nearly doubled off of a 10-year low of 5.44 from December.

Short sellers buying back shares to close their trades have driven a great chunk of demand. BlackBerry was one of the most heavily shorted stocks last year. It's still 39% below its 52-week high.

The Waterloo, Ontario-based company announced Tuesday it's selling most of its Canadian real estate for an undisclosed sum to raise cash. The Department of Defense said last week that it plans to connect 80,000 BlackBerrys to its new mobile system launching Jan. 31.

A Citron Research report released Friday is looking at a minimum price target of $15. BlackBerry reinvented itself as an "enterprise software developer with focus on mobile device management solutions," the report notes. It's no longer an equipment company after selling its money-losing handset unit to Foxconn. It's thereby eliminated "device inventory risk" from its balance sheet, Citron's report says.

With nearly $3.45 billion cash on hand, BlackBerry has enough money to carry out its turnaround plan and make the investments needed for growth.

"With a competent executive team, strong product offerings, ample cash to make investments and well-established existing sales relationships with enterprise clients, there is little reason to believe BlackBerry stands to lose the enterprise (mobile device management) market," Citron wrote.

Most Wall Street analysts, on the other hand, have an underperform, hold or neutral rating on the company, which controls merely 2.8% of the global mobile phone market. S&P Capital IQ forecasts revenue will drop 37% in fiscal 2014 and another 35% in 2015, following a 40% decline in fiscal 2013. S&P estimates per-share operating losses of $1.74 in 2014 and $1.39 in 2015, following a per-share loss of 64 cents in 2013.

"Declining smartphone sales, stiff competition from handset manufacturers, escalating marketing expenses and lukewarm response for the new BB10 operating platform will continue to act as head winds," Zacks Investment Research wrote in note Jan. 8.

ETFs Holding BlackBerry

Investors who want to bet on the stock but have little appetite for risk may nibble at it through an ETF. Only five traded on the stock markets have a stake in the Canadian firm, according to XTF.com.

IShares North American Tech-Multimedia Networking ( IGN ) has the most exposure with a 6% weighting in the stock.

First Trust Nasdaq CEA Smartphone Index ( FONE ), with a 5% weighting, holds 60 other names.

The other three ETFs have less than half a percent weighting:RevenueShares ADR Fund ( RTR ),iShares North American Technology ( IGM ) andFidelity Nasdaq Composite Index (ONEQ).



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , ETFs

Referenced Stocks: BBRY , FONE , IGM , IGN , RTR

Investor's Business Daily

Investor's Business Daily

More from Investor's Business Daily:

Related Videos

Stocks

Referenced

Most Active by Volume

55,090,865
  • $14.87 ▼ 1.59%
30,607,367
  • $56.37 ▲ 7.05%
26,613,946
  • $3.475 ▼ 2.11%
25,190,307
  • $17.09 ▲ 0.47%
24,954,597
  • $14.34 ▼ 2.45%
17,385,310
  • $101.46 ▲ 1.35%
15,088,653
  • $4.9299 ▼ 0.41%
13,676,075
  • $90.76 ▼ 0.20%
As of 9/30/2014, 11:06 AM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com