Research in Motion (RIMM): Is it time to sell?
7-3-07:The recent appreciation of RIMM shares has been great for the long term investors. Since reporting its earnings last week, the stock has jumped about $40, now trading a little above $200 per share. A few months ago we predicted RIMM was undervalued at $135 per share when Wall St. sold off as the company guided lower than expected. Those that have bought it back then are now reaping the benefits of buying when others were panicking. In RIMM’s case, it was an easy call given the company’s sound fundamentals.
We believed there is still a lot of growth ahead for RIMM. Despite all the hype about the Apple’s iPhone, we believed business users will opt to remain with the Blackberry given its proven hardware and software. We always believed it is only a matter of time before RIMM introduce its own product to compete with the iPhone. For these reasons alone, we believed RIMM’s long term prospect remains strong. In the mean time, the company continues to add new subscribers and continue to rake in strong profit.
As for the current stock valuation, we believed it is time to take some profit. The recent run up has made the stock expensive and now priced for perfection. For this reason, we believed the risk of RIMM heading south is greater than additional appreciation in the short term. Thus, we plan to sell some of our position at this price and wait for the next opportunity.
