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.
Saturday, May 1, 2010
Rim:T- The time to love RIM has arrived Earnings are strong, valuation is cheap
Friday, April 30, 2010
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%
Technically Speaking Time To Buy YRI-T
Highlighting: Yamana Gold Inc. (Public, TSE:YRI)
The markets get battered and gold stocks rally. This was the theme of the day on Tuesday that saw Gold stocks rally to gains of as much as 2%. So I suppose you want a Gold play… well here it is. Yamana Gold Inc. gained just over 2% on the day as investors sought safety in Gold following the bottom falling out in equities. Wednesday brings upon earnings from Goldcorp and Barrick, so best bet is to wait for the morning earnings report to make your play.
Stocks were clobbered today, averaging losses of 2.29% on volumes over 30% higher than the day previous. Of the 1661 stocks analyzed, only 145 advanced, 1506 declined and the last 10 were dead even…or possibly just dead. Overbought levels have come way down, now only in the single digit percentage points according to stochastics and RSI. Small-Caps won the session yet again, losing the least amount of value at 2.32% on average. Mid-Caps and Large-Caps rounded out the losses at 2.39% and 2.68%, respectively. Bolstering the losses amongst the stocks analyzed were equities traded on the Toronto Stock Exchange, which only saw losses of 0.89%.
Yamana is rebounding from a significant support level at $10 after finding significant volume on Tuesday, floating the stock amongst the losses present in the market. With volatility increasing, Gold is being sought as a safe haven, however with earnings continuing to progress the ideal entry point at this level is all but certain. Two majors within this space, Goldcorp and Barrick, report on Wednesday, which may subject this stock to pressure if the earnings are not interpreted well. But for the most part, Gold and Gold related stocks are seen as a safe choice and poised to receive a little bit of strength after being ignored in the market upturn since February lows.
The stock faces a quick spurt coming off of Q1 earnings season in the month of May for gains reaching 10% on average. Will history repeat? The main period of strength for the equity is at year end for substantial returns over the period.
Retirees may be forced to keep risking investments
The turmoil in Greece, hot on the heels of the financial crisis and the tech wreck before, may have future retirees scurrying to the safety of fixed income again but investors should keep their focus squarely on growth to avoid outliving their portfolios, a new report argues.
"Retirees should keep a significant portion of their wealth allocated to risky assets, like stocks, in order to provide enough growth over the long run and avoid prematurely depleting their wealth," Kurt E. Reiman, a strategist at UBS AG said in a note to clients.
At retirement, investors have typically been taught to become more risk averse by reducing their exposure to equities and other growth assets in favour of fixed-income securities such as bonds. Indeed, a well-worn rule of thumb is to allocate your age in bonds. In other words, at 70 years of age, an investor should hold 70% bonds, and 30% equities.
But traditional cookie-cutter retirement approaches that recommend reduced risk for all may not do the trick anymore.
"I use it as starting point, but many portfolios need more growth in order for people to retire on their own terms these days," Adrian Mastracci, a portfolio manager at KCM Wealth Management Inc. in Vancouver, said.
According to Mr. Reiman, a variety of societal trends has rendered retirement as we know it a thing of the past. As a result, that is creating new financial objectives for investors that are much more personalized in nature compared with the largely shared retirement mindset of the past.
"Pension plans, both public and private, face imminent funding pressure because there are fewer people working and more people retiring," he said.
"Medical costs and spending on health care services are on the rise as well, which burdens government finances even further. At the same time, people are anticipating longer active lives, with some form of employment potentially a part of the picture."
Mr. Reiman said these trends are not happening in isolation, but instead are converging to alter how people perceive their relationship to their career and how they plan to pay for the time when their careers end.
Faced with growing pressures to meet their spending needs, wants and wishes, retirees are also dealing with increasing levels of uncertainty and complexity related to financial risks, such as market volatility and inflation.
To combat these challenges, he said more portfolio growth is needed. He recommended a portfolio that includes stocks, commodities or real estate, highlighting two strategies that offer growth, but also provide a degree of safety for investors.
The first is a laddered approach of short-term bonds maturing over the next five years, and an additional growth portfolio for the longer run. "The main advantage of this strategy is that investors can weather storms on the financial markets, he said.
"The retiree has a period of up to five years before he/she has to sell assets from the diversified growth portfolio. Therefore, the investor is not forced to sell assets in a severe bear market, but can hold onto his/her investments until the market has recovered."
A second approach is to consider annuities as part of the solution, which can better address longevity risk.
Mr. Mastracci said most of his clients in retirement fluctuate between 40% and 50% growth exposure in their portfolios in order to meet their individual needs. However, like the UBS report, he stressed the importance of ensuring each portfolio provides some degree of emotional comfort.
"Some people may need some extra juice in their portfolio, but they have to be satisfied with the potential extra risk," he said.
Financial Post
