Friday, May 28, 2010

Research In Motion

This is not my usual stock (TSX-RIM, NASDAQ-RIMM), but I do like tech stocks and I do like investing in something more interesting than banks and utilities. I first bought this stock in December 1999. I sold some in 2006 and some more in 2007. To date, I have made a return of 21% per year on this stock. I will eventually sell this stock, as non-dividend paying stock is not the sort I keep for the long term.

No matter what growth figures you look at, whether in US$ or CDN$, all are great. I will review the most important ones of revenues and cash flow. For Revenues, in US$ or CDN$, the growth per year for the last 5 and 10 years is around 60% per year. The cash flow for the last 5 and 10 years has been 57% per year and 73% per year, respectively in CDN$. For Revenue and Cash Flow, the US$ figures are better than the CDN$ figures. This is because the CDN$ has been appreciating against the US$ lately. This company sells their products world wide and reports in US$.

If you held this stock for the last 5 and 10 years, the return would be about 22% and 16% per year respectively, in CDN$. Why I have made a better return is because I sold some stock when the price went high and so locked in some profits.

Another good thing about this stock is the strong balance sheet. The Liquidity Ratio and the Asset/Liability Ratio are quite high at 2.39 and 3.92 respectively. Any value for these ratios of 1.50 and above is very good. The Return on Equity is also quite high, coming in at a 5 year average of 30% and for 2010 at 32%. The last thing to talk about today is the Accrual Ratio. This ratio is at present at 8.8%. This is very high, but not as high as it has been. The problem with a high Accrual Ratio is that it can call into question the quality of the earnings for a company. These values are the same whatever currency you are using.

I am happy with this stock and for the moment will retain what I have left. However, since this is not a dividend paying stock, I will sell at sometime in the future.

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 here RIM. See my spreadsheet at 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 for stocks followed and investment notes. Follow me on twitter.

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