BlackBerry (TSX:BB)(NYSE:BB) has been one of the most volatile stocks over the past few years, but never more so than in 2020. After years of single-digit share prices, the stock surged with the election of Joe Biden as the new president of the United States. It then peaked in January at a price of $36! Given that its lowest price of $3.94, that would have been a gain of 813%!
Investors today are confused at what to make of BlackBerry stock. If you’re opportunistic, it could be a great long-term play. However, others, including me, aren’t sold on buying BlackBerry stock. Even with the $8 billion company now trading at more than half of its peak pricing.
The main reason I’m bearish on BlackBerry stock, at least in the short term, is the future of electric vehicles (EV) and cybersecurity. Yes, EVs will be the future, and cybersecurity has become a necessity as well. However, BlackBerry stock has a ton of competition in both areas.
Companies like Alphabet and Apple are already making autonomous vehicles and could create something that can combat BlackBerry’s QNX software and IVY platform. In fact, Ford recently dropped the company as its provider. As for cybersecurity, there are a ton of companies that are better positioned than BlackBerry to takeover the market.
In my opinion, the valuations for BlackBerry stock are too pricey to consider at this point. The company has a cheap 3.3 price-to-book (P/B) ratio, sure, but it has a price-to-sales (P/S) ratio of 6.4. While that’s not terrible, it’s not exactly a value stock at this point. So, it might be better to check out two other top Canadian stocks instead of BlackBerry stock.
Get energy exposure
Sure, green energy stocks were on fire as investment from Joe Biden has been promised for the next decade. However, this investment isn’t going to see revenue to make it incredibly appealing for years to come. However, oil and gas is already seeing a rebound that hasn’t been seen in years.
The pandemic set production as well as share prices to all-time lows. Now, there is a rebound that could explode in the coming years, with oil prices finally climbing again. The Canadian oil and gas sector in particular should see a major boost with the oil and gas glut finally (hopefully) coming to an end.
So, if you want value, you want a company that will provide stability in the years to come. That would include a company like Pembina Pipeline (TSX:PPL)(NYSE:PBA). The $21 billion company has a 3.3 P/S ratio and an incredible 1.5 P/B ratio. Yet the company is supported by long-term contracts that will see cash flow come in for decades. Today’s share price is based solely on the delay in its growth projects. However, it really doesn’t need those projects to keep its 7.83% dividend yield climbing. Shares are up 78% in the last year, climbing 25% year to date, but they are still a steal today.
Take advantage of the pullback
Many believe with the pandemic soon coming to an end, we’ll return to pre-pandemic norms. That’s simply not the case, and it’s why the tech pullback has been blown way out of proportion. We have changed the way we consume products, and that’s the case with the necessity of the tech sector.
So, if you want to take advantage of the tech pullback, you’ll again want a company with stability that will also continue to see a rise in the future. Open Text (TSX:OTEX)(NASDAQ:OTEX) is the perfect option, providing cybersecurity to cloud-based data, and working with such household names as Alphabet. What’s great is that revenue still has to come in long term, so investors can look forward to years of growth.
It’s also been growing through acquisitions — a strategy that’s kept the companies revenue climbing for years and even decades. Shares of the $16 billion company are up 36% in the last year and are climbing back from the pullback. Yet over the last decade, shares are up about 400% for a compound annual growth rate of 17%! With cybersecurity soaring now, this proven company can look forward to similar growth and even higher growth in the years to come.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Fool contributor Amy Legate-Wolfe owns shares of PEMBINA PIPELINE CORPORATION. David Gardner owns shares of Alphabet (A shares), Alphabet (C shares), and Apple. Tom Gardner owns shares of Alphabet (A shares) and Alphabet (C shares). The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Apple. The Motley Fool recommends BlackBerry, BlackBerry, Open Text, OPEN TEXT CORP, and PEMBINA PIPELINE CORPORATION and recommends the following options: short March 2023 $130 calls on Apple and long March 2023 $120 calls on Apple.
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