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Research in Motion (RIMM): Blackberry breakout
Leo Fasciocco seeks stocks that have broken out from technical basing patterns, such as Research in Motion Ltd. (NASDAQ: RIMM), maker of the well-known BlackBerry line of phones. In his The Ticker Tape Digest, he explains, "The long-term chart shows RIMM in a powerful bull market. Short-term, the stock recently broke out from a six-month, cup-and-handle base at the $131 level. Our target is now $160." insert.a.chart.RIMM "RIMM's primary revenue driver is the sale of handsets to carriers worldwide that promote the company's BlackBerry line of devices. It also generates access service fees from carriers for each BlackBerry subscriber. "Software licensing revenues are also generated from corporate clients using the BlackBerry Enterprise Server software in their wireless data management. Overall, annual revenues are $3 billion. The stock has a beta of 2.44, which means it has double the volatility of the stock market, which is at 1.00 as measured by the S&P 500 index. Over the past 12 months, RIMM's stock has appreciated 190% versus a 5% decline in the S&P 500 index. "Net for the upcoming fiscal first quarter ending May 30 should surge 118% to 85 cents a share from 39 cents a year ago. The highest estimate on the Street is at 88 cents a share. The company tends to come in slightly above the consensus. "For this fiscal year ending February of 2009, analysts predict RIMM's profits will jump 67% to $3.77 a share from $2.26 a year ago. The stock sells with a price-earnings ratio of 35. We see that as reasonable given the earnings growth rate outlook. Next fiscal year 2010, analysts predict a 33% gain in net to $5.01 a share. "Institutional sponsorship is excellent. The top four fund holders all have a 5-star rating, highest possible. The largest holder is Fidelity Contrafund with a 1.8% stake. It was a recent buyer of 109,000 shares. 3-star rated Janus Fund added 119,000 shares. "Overall, RIMM remains a hot stock. If the stock can make a new high, it could draw in some big buying. We are targeting a move to $160 a share within the next few months. A protective stop can be placed near 125." by TheStockAdvisor (TheStockAdvisor.com) Disclaimer: Please note that charts and commentary provided by the moderator are for educational purposes only. Any trades placed upon reliance on the moderator’s charts or information is taken at your own risk for your own account. Past performance is no guarantee of future results. While there is great potential for reward trading stocks, futures and options, there is also substantial risk of loss and you must decide your own suitability to trade. Future trading results can never be guaranteed. This is not an offer to buy or sell stock, futures, options or commodity interests. Most trading systems are based on historical formulas which have worked in the past. However, what has happened before may or may not happen again. You can lose all your money trading stocks, futures, and options and you must decide your own suitability as to whether or not to trade. Only trade with true risk capital you can afford to lose. Only trade markets you can properly afford to trade. Properly funded trading accounts typically perform better than those that are not. Never risk more than 2-3% of your account on any one trade. Always define your risk before entering a trade and place a stop to limit your risk. There are no guarantees or certainties in trading. Trading involves hard work, risk, discipline and the ability to follow rules and trade through any tough periods during a system’s draw downs. If you are looking for a guarantee, trading is probably not for you. Most people lose money trading. One of the reasons is that they lack discipline and are unable to be consistent. A system can help you become consistent. Ironically, worrying about the monetary aspect of trading can contribute to and cause a trader to make trading errors. Therefore, it is important to only trade with true risk capital. |
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