BlackBerry could be ready for a breakout, this portfolio manager says

So far this year, BlackBerry (Quote, Chart TSX, NYSE:BB) shareholders have been on a bumpy ride, with the stock tumbling from an early January high and thus far showing little promise of making up those losses. But hang on, says portfolio manager Keith Richards at ValueTrend Wealth Management, because BB could be ready to take off.

BlackBerry’s transition from handset maker to software and security company has been progressing as planned, says CEO John Chen, who at the release of its fiscal Q1 lauded his company’s new focus on making software for next-generation autonomous vehicles.

“I am pleased that BlackBerry QNX software is now embedded in over 120 million automobiles worldwide, doubling the install base in the last three years,” Chen said.

In its June 22 quarterly, BB posted consensus beats for revenue at $217 million (versus the expected $209.6 million) and for EPS at $0.03 per share (versus the Street’s negative $0.03 per share). (All figures in US dollars.) The company reported an 18 per cent rise in its revenue from enterprise software and services business to $189 million.

Investors showed little interest, however, as the stock continued to drift lower, dropping below the $10.00 mark for the first time in almost a year.

Still, Richards is optimistic that an upturn is around the corner.

“We know it’s a volatile stock, there’s no doubt about it. It’s range-bound but it’s somewhat making higher lows,” says Richards in conversation with BNN Bloomberg. “Our view is that if it can break out of this range — and we have fundamental reasons for it possibly doing that — then it could have a lot of upside, but it is yet to be seen.”

BlackBerry is scheduled to release its next quarterly earnings (its fiscal Q2) on September 27, with analysts so far estimating $213.5 million in sales for the quarter.

“It’s not a stock I would say to put the biggest position in your portfolio into but it’s reasonable probability that this stock because of the fundamentals may break out,” says Richards. “In the meantime, we bought it near the bottom of the range and we think, eventually, the stock could break out.”