Can BlackBerry (TSX: BB) shares come back to $ 30? – The brave fool Canada

Shares of Blackberry (TSX: BB)(NYSE: BB) reached 52-week highs of $ 36 just a few weeks ago. In the midst of the stream of retail purchases that saw GameStop, AMC, and other high-risk stocks are rising, BlackBerry also received a major boost in its stock price. But was it just a one-time bump, or can the stock get close to these heights again?

Why another rally could happen this year

There is a lot to like about BlackBerry’s business. It has high margins, it has many returning customers and that recently landed a deal with Amazon Web services that could generate significant revenue as the two companies work to provide automakers with some valuable measurements and data based on information they collect from vehicle sensors. If it leads to other deals or there is another development that could generate bullishness, it would not be surprising for BlackBerry to rise in value again. If retail investors have targeted it before, it could be a sign that it’s on their radars. And that makes the stock a possible target in the future, especially if there is some good news to gather around.

Why the stock could be declining

On its own merits, BlackBerry is probably not worth being too bullish on yet. Sale in its most recent quarter amounted to only US $ 218 million – this is the second lowest revenue figure it has reported in the last five periods. It has also struggled to stay out of the red without reporting a profit for the next 12 months. And with many competitors offering cybersecurity options out there, growth is by no means a guarantee for the BlackBerry.

There are many questions about the company’s future, and until it can generate some consistent growth figures, it will be difficult for investors to take BlackBerry seriously as a top growth stock. And it appears from the valuation that investors are simply not willing to pay much of a premium for it. When comparing price-to-sales figures, its multiple is far lower than other top-tech companies on TSX, including Shopify, Kinaxisand Lightspeed:

BB PS ratio data from YCharts.

While this may suggest that BlackBerry is cheap in terms of these stocks, their companies have also generated much more growth and that is probably a big part of the reason for the discrepancy in the valuation.

Need to buy BlackBerry shares today?

Although the hype has gone down a bit around the BlackBerry, it still trades at more than $ 16 per. Shares. That’s double where it was to start the year. It would not be surprising to see the stock at least remain at this level for some time, especially as it was undervalued for a long time. It is possible that the BlackBerry is steadily rising in value, but it can be a stretch to expect it to double in value again from where it is right now. Without a huge announcement or development, it is likely that the stock has already reached its peak in 2021.

However, it can still provide a good long-term investment as the company shows signs of progress. But investors will have to be patient if they want to earn a good return from this stock.

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