Stock on Stock: Research in Motion (RIMM)

Thursday, December 24, 2009

Research in Motion (RIMM)

Q: I watch fast money on CNBC they were down on RIMM for several weeks and even cited an analyst who had a price target of $50 per share. The price soared to over $70 recently. I sold out at $60. What happened? JB from Atlanta

A: JB you are correct, there were quite a few experts that put "Sell" recommendations out of RIMM during the last several months. What happened was RIMM (think BlackBerry) sold the heck out of there products and made good headway on expanding business in China. I believe the negative bias in the predictions was brought on by two things. 1. No one was getting a clear picture from Research in Motion on current sales levels and 2. The introduction of the Druid from Motorola is expected to take a lot of business. The Call Option action was indicating solid numbers by RIMM into the December option expiration date. The option players were correct and the price on RIMM soared on their earnings report for the third quarter released on Dec 16. It is still possible for RIMM to hit the $50/share level. I would be a buyer if it gets to that level and then moves higher (check out the when to buy chart for stocks in Investors Business Daily for a primer on technically when to buy) . I would not buy it at the current $68/Share as I believe an investment in Verizon or A T & T with 6% dividend yields make more sense for the investor.

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