Rim:T- The time to love RIM has arrived Earnings are strong, valuation is cheap

The time to love RIM has arrived
Earnings are strong, valuation is cheap

RIM-TSX

The success of Apple Inc.’s iPhone has been great news for Research In Motion Ltd. – or at least for those investors sitting on the sidelines, wondering if they should invest in the BlackBerry maker.

In its pre-iPhone heyday, RIM was the name in the smart phone market, particularly among business folks. But the company’s success and innovation drove the stock price – and, more importantly, its valuation – to levels that can only be described as silly.

One of the most popular valuation measures is the price-to-earnings ratio, which simply compares a stock price to the company’s annual earnings on a per share basis. In the case of RIM, the stock commanded a P/E ratio of more than 50 just as recently as two years ago, when the shares hit a record high of $150.

Put another way, investors were willing to pay $50 for every dollar that RIM earned – an absurd price that echoed the craziest days of the dot-com bubble. Even if you loved the BlackBerry, it was hard to fall in love with the stock.

And now, for the first time in years, it just might be possible to love them both. RIM’s earnings have been hitting record highs for the past four consecutive quarters and its share within the smart phone market continues to climb.

Yet, the stock’s P/E ratio is bouncing between 15 and 17. That makes it look more like a staid utility than an exciting technology company whose earnings are growing at a double-digit clip.

By comparison, RIM’s competitors look pricey. Apple’s P/E is 22 and Nokia Corp.’s is 30.

A low valuation reflects concerns, of course, and RIM is not without them. RIM’s inroads into the retail market (the business market is its core strength) has been mixed because the BlackBerry isn’t associated with fun and hip.

As well, the competition remains fierce, particularly now that the iPhone brand is becoming synonymous with wireless communication. There are also concerns that Motorola Inc.’s deal to acquire Palm Inc. might revitalize what had been a dying competitor.

In RIM’s favour is a new operating system for the BlackBerry, due to be released later this year, which has already earned rave reviews from analysts. If reviews don’t impress you, the numbers might: Amid surging global demand for smart phones, RIM’s market share is climbing. According to International Data Corp., RIM broke into the top-five handset makers in the first quarter, for the first time.

“Some analysts believe that the era of the BlackBerry is nearly over,” said Douglas McIntyre, at 24/7 Wall Street. “On the contrary, it has features unmatched by its competition, and that will make it very hard to catch.”

The stock, once too hot to handle, is now nice and cool.

Top 100 Canadian Stocks with Highest Upside Potential Updated Apr 29, 2010

Top Canadian Stocks with Highest Upside Potential Updated Apr 29, 2010

RANKINGS: TOP 10 Lists; Tech Leaders; Large Cap; Dow 30; Chinese ADRs | FREE Newsletter

Below are the top Canadian stocks with highest upside potential, calculated as the difference between current price and Wall Street analysts' average target price.

Ranking | Company (Ticker) | Potential Upside
1 Tethys Petroleum Limited (TSE:TPL) 8060.2%
2 Crew Gold Corporation (TSE:CRU) 4900.0%
3 Lanesborough REIT (TSE:LRT.UN) 1637.7%
4 Kimber Resources, Inc. (TSE:KBR) 1293.5%
5 BioSyntech, Inc. (TSE:BSY) 445.5%
6 Continental Precious Minerals Inc (TSE:CZQ) 408.5%
7 Allon Therapeutics Inc. (TSE:NPC) 377.7%
8 Isotechnika Pharma Inc (TSE:ISA) 328.6%
9 Energy Fuels Inc. (TSE:EFR) 314.6%
10 Wall Financial Corporation (TSE:WFC) 270.7%
11 ProMetic Life Sciences Inc. (TSE:PLI) 270.4%
12 UEX Corporation (TSE:UEX) 250.0%
13 Hydrogenics Corporation (TSE:HYG) 241.1%
14 Commercial Solutions Inc. (TSE:CSA) 221.0%
15 Duluth Metals Limited (TSE:DM) 217.3%
16 Carpathian Gold Inc. (TSE:CPN) 212.5%
17 Rockwell Diamonds Inc. (CAN) (TSE:RDI) 207.7%
18 DiagnoCure Inc. (TSE:CUR) 205.1%
19 Powertech Uranium Corp. (TSE:PWE) 189.6%
20 Fortune Minerals Limited (TSE:FT) 182.9%
21 Protox Therapeutics Inc. (TSE:PRX) 175.4%
22 Strateco Resources Inc. (TSE:RSC) 170.5%
23 Apollo Gold Corporation (TSE:APG) 167.6%
24 Cyberplex Inc. (TSE:CX) 166.7%
25 Peregrine Metals Ltd. (TSE:PGM) 165.1%
26 Mega Uranium Ltd. (TSE:MGA) 158.9%
27 Intermap Technologies Corporation (TSE:IMP) 154.5%
28 Formation Metals Inc. (TSE:FCO) 154.0%
29 Warnex Inc. (TSE:WNX) 150.0%
30 Candente Copper Corp (TSE:DNT) 150.0%
31 Laramide Resources Ltd. (TSE:LAM) 137.6%
32 SemBiosys Genetics Inc. (TSE:SBS) 130.8%
33 Shore Gold, Inc. (TSE:SGF) 129.9%
34 Western Potash Corp. (TSE:WPX) 126.7%
35 Burcon NutraScience Corporation (TSE:BU) 126.0%
36 Linear Gold Corp (TSE:LRR) 125.5%
37 PolyMet Mining Corp. (TSE:POM) 122.3%
38 Phoscan Chemical Corp. (TSE:FOS) 122.2%
39 LAB Research Inc. (TSE:LRI) 122.2%
40 Intrinsyc Software International, Inc. (TSE:ICS) 121.0%
41 CIC Energy Corp. (TSE:ELC) 120.6%
42 Franconia Minerals Corporation (TSE:FRA) 119.3%
43 Global Alumina Corporation (TSE:GLA.U) 114.3%
44 South American Silver Corp. (TSE:SAC) 114.3%
45 Nautilus Minerals Inc. (TSE:NUS) 112.0%
46 Coro Mining Corp. (TSE:COP) 110.2%
47 Peregrine Diamonds Limited (TSE:PGD) 108.0%
48 HSE Integrated Ltd. (TSE:HSL) 106.5%
49 Magindustries Corp. (TSE:MAA) 106.2%
50 U.S. Geothermal Inc. (TSE:GTH) 105.7%
51 Questerre Energy Corp. (TSE:QEC) 104.1%
52 TSO3 Inc. (TSE:TOS) 102.1%
53 Wallbridge Mining Company Limited (TSE:WM) 100.0%
54 CryptoLogic Limited (TSE:CRY) 98.3%
55 Sulliden Exploration Inc. (TSE:SUE) 98.3%
56 Aeroquest International Limited (TSE:AQL) 96.4%
57 YM BioSciences Inc. (TSE:YM) 93.7%
58 Webtech Wireless Inc. (TSE:WEW) 93.4%
59 CriticalControl Solutions Corp (TSE:CCZ) 91.2%
60 Dynasty Metals & Mining, Inc. (TSE:DMM) 90.7%
61 Bennett Environmental Inc. (TSE:BEV) 90.0%
62 Resverlogix Corp. (TSE:RVX) 89.7%
63 Labrador Iron Mines Holdings Limited (TSE:LIM) 88.6%
64 Silver Bear Resources Inc. (TSE:SBR) 87.5%
65 La Mancha Resources, Inc. (TSE:LMA) 85.3%
66 Platmin Limited (TSE:PPN) 84.0%
67 Augusta Resource Corp. (TSE:AZC) 83.7%
68 ProSep Inc. (TSE:PRP) 83.3%
69 Divestco Inc. (TSE:DVT) 83.1%
70 Crocodile Gold Corp (TSE:CRK) 83.1%
71 Global Railway Industries Ltd. (TSE:GBI) 80.4%
72 Cangene Corporation (TSE:CNJ) 79.5%
73 Hemisphere GPS, Inc. (TSE:HEM) 78.8%
74 Baja Mining Corp. (TSE:BAJ) 78.6%
75 Enterra Energy Trust (TSE:ENT.UN) 77.5%
76 Pinetree Capital Ltd. (TSE:PNP) 76.6%
77 Clearwater Seafoods Income Fund (TSE:CLR.UN) 76.5%
78 Wireless Matrix Corporation (TSE:WRX) 76.0%
79 Cinch Energy Corp. (TSE:CNH) 75.8%
80 Bronco Energy Ltd (TSE:BCF) 72.4%
81 Angiotech Pharmaceuticals, Inc. (TSE:ANP) 72.4%
82 Pethealth Inc. (TSE:PTZ) 71.4%
83 Orbit Garant Drilling Inc. (TSE:OGD) 71.2%
84 BioteQ Environmental Technologies Inc. (TSE:BQE) 71.1%
85 Potash One Inc (TSE:KCL) 70.7%
86 Oncolytics Biotech Inc. (TSE:ONC) 70.4%
87 Ur-Energy Inc. (TSE:URE) 69.3%
88 Gold Wheaton Gold Corp (TSE:GLW) 67.5%
89 DragonWave, Inc. (TSE:DWI) 67.2%
90 Sure Energy Inc. (TSE:SHR) 66.7%
91 Carmanah Technologies Corporation (TSE:CMH) 66.7%
92 MGM Energy Corp. (TSE:MGX) 66.3%
93 Xtreme Coil Drilling Corp. (TSE:XDC) 65.5%
94 Aura Minerals Inc. (TSE:ORA) 64.9%
95 Minera Andes Inc. (TSE:MAI) 64.3%
96 Mercator Minerals, Ltd. (TSE:ML) 64.3%
97 Day4 Energy Inc. (TSE:DFE) 63.4%
98 Guestlogix Inc. (TSE:GXI) 62.9%
99 Etruscan Resources Inc. (TSE:EET) 60.3%
100 Dundee Corp. (TSE:DC.A) 59.3%