Research in Motion

I am reviewing 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.

I first bought this stock in December 1999. I sold some in September 2006 and November 2007. The stock I have left is still worth twice my original buy cost. According to quicken I have made a return of some 21% per year on this stock. I do not expect to hold this stock for the long term. I will sell at some point in the future. However, buying such stock can be fun, and as long as you only invest a small amount of your portfolio in such things, you will be fine. Do not invest in such stocks money you cannot afford to lose.

When you look at the growth figures on this stock, they are, of course, all great. Even the stock price growth for the last 5 years is great. The thing to point out is that this stock does a lot of its business in the US and reports in US currency. The Canadian currency is getting stronger while the US is getting weaker. The expected earnings for this company has gone up in US currency, but down in Canadian currency.

When you look at the Liquidity Ratio and the Asset/Liability Ratio, you find that both of these are high. The Liquidity at February 2009 was 2.29 and the Asset Liability Ratio at the same time was 3.64. Any ratio above 1.50 is good, so these ratios are very good.

The next thing to talk about is the Return on Equity or ROE. The ROE has been getting better and better on this stock. The 5 year average at the end of February 2009 was 27% and the current 5 year average to August 2009 is 26.2%. (The 5 year average at February 2006 was only 5%.)

Looking at revenues, earnings and cash flow, you can see that this company is making money. The one negative thing that I see is the Accrual Ratio and this is very high at 12%. Although, I must admit, this ratio has always been high. Tomorrow I will look at what the analysts say about this stock.

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.