Research In Motion: Only Bottom Feeders Need Apply

NEW YORK (TheStreet) -- Research In Motion (RIMM) is a stock in freefall. I can't believe that anyone has held on to this stock but there are still some who pray for a dead-cat bounce from this dead horse.

I try to invest by being rational and unemotional but it seems there are some that consider this company a pity investment. I'd like to share a chart I drew using Barchart that compares the trading prices of RIMM and its peers over the past 3 1/2 years. While RIMM fell 90%, America Tower ( AMT) rose 112%, Crown Castle International ( RIMM) was up 167% and SBA Communications ( SBAC) was up 136%.

The chart says it all:

Research In Motion designs, manufactures and markets wireless solutions for the mobile communications market worldwide. It provides platforms and solutions for access to information, including email, voice, instant messaging, short message service, Internet and Intranet-based browsing, and multimedia content through developing integrated hardware, software, and services.

The company sells its BlackBerry wireless solutions through global wireless communications carriers and third party distribution channels. Research In Motion was founded in 1984 and is headquartered in Waterloo, Ontario. (Yahoo Finance profile)

Factors to Consider:

Technical indicators provided by Barchart:

Barchart has a 72% sell signal while Trend Spotter sees a bottom and has a technical hold. The stock trades below its 20-, 50- and 100-day moving averages and has a 41.03% Relative Strength Index. To illustrate the stock's momentum, it has fallen 16.84% in the last month, fallen 38.18% in the last quarter, and is presently trading 95.23% off its five-year high of 148.13 which occurred in June of 2008. The stock trades at $7.06, which is below its 50-day moving average of $7.67.

Fundamental Factors:

Wall Street is fascinated by the stock and 36 brokerage firms have assigned 47 analysts to make recommendations to their customers. Analysts project revenue will be down 45.1% this year and another 2.4% next year.

Earnings are estimated to be down 136.2% this year and average an annual increase of only 7.5% over the next five years. In spite of these puny forecasts, analysts have issued four buy, 26 hold, 11 underperform and six sell recommendations to clients.

The P/E ratio of 2.94 compares to the 15 P/E ratio of the market. To make matters worse, the release of its new BlackBerry 10 has been postponed again this time into next year. The only bright spot is the balance sheet has lots of cash with no debt and rates a B++ financial strength and about $18.50 book value per share.

Investor Interest:

It's hard to believe that 30 analysts still recommend a buy or hold. The individual investor is also interested in this stock and 5,804 readers of Motley Fool who voted gave a 76% confidence vote for the stock to beat the market. I agree with TheStreet rating of D+ and the short sellers who began the year shorting 48 million shares and now short 87 million shares.

Peers:

When I look at the analysts projections I question why you would choose RIMM over its peers.

American Towers: TheStreet rating B. Revenue projected to grow 16.2% this year and another 10.2% next year. Earnings expected to increase 54.1% this year, 33.80% next year and average an increase of 18.57% annually for five years.

Crown Castle International: TheStreet rating of B. Revenue expected to be up 14.9% this year and 7.4% next year. Earnings to grow 64.2% this year, 36.8% next year and annually average 23.87% growth over the next five years.

SBA Communications: TheStreet rating of C. Revenue estimated to be up 28.5% this year and 14.00% next year. Earnings expected to be up 11.5% this year, 80% next year and average an increase of 17% for five years out.

Conclusion: Only bottom feeders need to look at Research In Motion and then as a speculation, not as an investment. With a P/E ratio of 2.94 and a book value around $8.50 the stock is a depressed bargain.

I would jump in if the revenue and earnings growth projections were positive, but they aren't. For you speculators looking for price action, it will only be caused by the short interest trying to cover their short positions by buying in. Closely monitor the moving averages and turtle channels to see when or if that will ever happen:

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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