I am continuing my review of this stock (TSX- RIM, NYSE-RIMM) today as I received the November 2008 annual report and I have not reviewed it since I received this report. This is a stock I bought for fun. It is not a dividend paying stock, which is what I usually buy. However, there is not much excitement in buying stolid dividend paying stock.
It is hard to know what to think about all the insider selling. The insider selling is because those doing it have most of their wealth tied up in this company and they want to diversify and also give to charity. James Balsillie wants to buy a sports team. A sports team must be a lot riskier than owning RIM. There seems to be divided opinions on whether or not all this selling is a negative or not. Most of this selling is set up to occur automatically, no matter what the condition of the market or the stock price is.
When you look at spreadsheet ratios, I find that I have a P/E of 15, which is not far from sites that use last 12 months earnings and they have a P/E of around 17. The 5 year low average is 25. This is a growth company, so the P/E’s tend to be on the high side. A P/E of 25 is not bad for a growth company. When looking at the Price/Book Value Ratio, I find the current Ratio is about 90% of the 10 year average. This is not bad either, but a buy signal is usually at 80% of the 10 year average.
When you look at the Price/Cash Flow Ratio, the ratio for 2010 is just under 15, and the 5 year average is 41. However, the P/CF for 2007 and 2008 was 15 and 17.7 respectively. The last thing to look at is the Graham Price. Currently, the stock price is some 92% greater than the Graham price. However, if you look at the past record, the stock price is usually 3 to 4 times the Graham price. This often happens with growth stocks.
Globe investor gives this stock a 3 star rating. When I look at analysts recommendations, I find Strong Buy, Buy and Hold recommendations. There are lots of analysts following this stock. The consensus recommendation will be a Buy. There are more Strong Buy and Buy recommendations than there are Hold recommendations. (See my site for information on analyst ratings.) Most of the analysts are unconcerned about all the Insider Selling.
At the moment, I am holding on to my stock, but I will sell them in the future, as I do not keep non-dividend paying stock for the long term.
Research In Motion is a leading designer, manufacturer and marketer of innovative wireless solutions for the worldwide mobile communications market. Through the development of integrated hardware, software and services that support multiple wireless network standards, RIM provides platforms and solutions for seamless access to time-sensitive information including email, phone, SMS messaging, internet and intranet-based applications. RIM technology also enables a broad array of third party developers and manufacturers to enhance their products and services with wireless connectivity. Founded in 1984 and based in Waterloo, Ontario, RIM operates offices in North America, Europe and Asia Pacific. Its web site is www.rim.com. See my spreadsheet at www.spbrunner.com/stocks/rim.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.
No comments:
Post a Comment