A company that has been on my watch list for some time, but not necessarily my buy list, is Canadian software company BlackBerry Ltd. (TSX:BB). BlackBerry, the former smartphone maker, has shifted its focus to providing software solutions for corporations, focusing on the company’s QNX embedded operating system that has earned the majority of its revenue from applications in vehicles.
With the coronavirus pandemic has come a reduction in the number of vehicles produced, and a reduction in spending among many car manufacturers. This has been a key headwind for BlackBerry’s revenue growth and earnings potential, and has dampened demand for the company’s shares.
While expectations are that auto manufacturing is likely to pick up this year, most analysts estimate it won’t be until 2022 that BlackBerry’s QNX division gets back to revenue growth from previous levels. This is a long time to wait for some investors, with many investors focused on putting their hard-earned money to work in companies that are growing right now, rather than looking for turnaround stories that may have value today.
With this in mind, I think it is prudent for most investors to adopt a “wait-and-see” approach with BlackBerry. More downside could be on the immediate horizon, so jumping in now and buying shares at these levels may not be the most advantageous move at this present time. Keeping this stock on your watch list rather than buy list right now therefore looks like the best option for most investors.
Invest wisely, my friends.