BlackBerry's stock, which is now up over 32% for the year based on its Monday close of $9.83, once again shot above its 200-day moving average. Investors aggressively accumulated, causing a spike in volume.
The BlackBerry stock move is far from over, in my opinion, and the party is just getting started. My previous BlackBerry article provided reasons for the bull thesis, but warned why sitting on your hands until the market fully digested the changing sentiment was warranted. (It was based on market timing, unlike my article Yes, BlackBerry Is a Buy that advised gaining exposure immediately.)
As I stressed in the volatility article, emotion is the driving force on any given day, but fundamental valuation mispricing is why individual stock investing can be more profitable than mutual funds or exchange-traded funds. For exact entry and risk ideas, see Monday's Real Money Pro trade idea.
Monday's upward movement was the third close above the 200-day moving average.. A first breakthrough of a 200-day, either upward or downward, rarely holds without retracing back to the other side. A second close above the 200-day continues the trend more often while a third price move that closes through usually continues the trend. Often enough that -- absent a compelling reason to ignore it -- provides an edge for investing.
I already feel BlackBerry is a value buy, and with Monday's third break above the average it's now a technical buy. If you've waited for the right risk vs. reward entry, it's difficult to imagine BlackBerry offering a more opportune time.
Aside from the Ford news was BlackBerry's announcement its mobile messaging platform will be on Microsoft Windows and Nokia (NOK) X phones in the coming months. Naysayers may claim BlackBerry permanently lost its ability to compete against Google's (GOOG) Android and iPhones from Apple (AAPL), but don't buy into that argument. North America isn't the entire world's market for handsets. Now that BlackBerry outsourced the production of low-end consumer handsets it's free to focus on more profitable services and enterprise solutions.
Compare BlackBerry's messaging announcement with the one by Facebook (FB) of a $19 billion purchase of Whatsapp, a mobile messaging service with about 450 million active users spread throughout the world.
BlackBerry has roughly 80 million subscribers, with a much higher concentration in North America. Each BlackBerry subscriber should, in theory, be worth more than each Whatsapp subscriber. If we fully discount BlackBerry's subscribers to the same amount Facebook just paid, BlackBerry should be trading near $12 a share before adding back in cash and other assets.
After adding cash back in, the company's valuation suddenly moves north of $17 per share. Simply stated, it's not difficult to reach a valuation of $20 per share after removing the intense pessimism that currently envelops the stock like an evil spirit.
If you have a chance to buy under $10 a share, you may want to consider it. For exact entries including the use of options to mitigate your risk, take a look at my Real Money Pro post.
At the time of publication, Weinstein had no positions in securities mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.