Apple and RIM shares rise as new products near release – but is the former a bubble and the latter a lost cause?

Posted by Knowlton Thomas

APPL rises, but so do expectations (AAPL)

The people are hopeful.

Hopeful that Apple's iPad 2 and iPhone 5, among other 2011 products like Lion OSX and new Macbooks, will continue to send AAPL shares closer to the moon. After everyone went nuts over Apple's milestone high of $300 earlier in 2010, the stock has since skyrocketed that much further, currently simmering hot at a remarkable $348. Investing in Apple at any point over the past decade would have been a solid investment.

Of course, there are two risks with Apple stock: the first is that Apple may be a bubble nearing its burst. The company is still highly profitable, thanks to high margins, but it has tremendous pressure on it to consistently deliver its signature "revolutions"—if Apple TV doesn't get popular in 2011, investors will expect a new revolution by 2012 or many will jump off board en masse. However, Apple could easily deflect any future slow of growth through dividends—if Apple, given its persona, offered even a one percent dividend, investors would go berserk with joy.

The second risk is that of Steve Jobs. Why? Because Apple is essentially Steve Jobs. Everyone witnessed Apple's stock dive after circulating rumours of Steve's ill health became reality; and the fact that he had kept cancer a secret from shareholders worried many loyal investors: what else did they not know? Even during quarters where revenues, sales, and profits were up, Apple stock dropped so long as Steve's health was in question. And that's a problem dividends can't solve.

RIMM climbs, but must deliver at the top (RIMM)

Research in Motion, which seemed invincible during the early 2000s, has been battered by a market saturated with aggressive competition from the iPhone and Android phones. As such, its stock has been battered, falling from a spectacular high of $144 in the summer of 2008 to below $40—a number not seen since it was still growing back in 2007, before the iPhone and Androids made their mark.

But the venerable BlackBerry maker is on the rebound, thanks to its forthcoming PlayBook, an enterprise-savvy tablet that has some of the most impressive specs of any tablet, released or otherwise. And recently leaked models of a next-gen BlackBerry Torch, next-gen BlackBerry Curve (aptly dubbed "the Apollo" for its sleek, futuristic lines), and the all-new BlackBerry Dakota—which is essentially the iconic Bold with a touchscreen and amped up specs.

RIM's share price has climbed from $44 to $65 since October, buoyed by the optimism that the PlayBook will succeed, with investors encouraged by signs that BlackBerry has many new products to launch.

The risk with a RIMM share, of course, is that it doesn't deliver. That its PlayBook underwhelms, and its next-gens fail to compete. This is nearly impossible to predict, however; and such is the life of a stock investor. 

I'm firm in the belief that RIMM will hit at least $80 this year, making it a solid investment at $65 (though I first recommended it at $60). Apple is apt to climb for the remainder of 2011—I honestly wouldn't be surprised if it hit $400 sooner than later. But if the bubble bursts, run to the BlackBerry fields.

Disclosure: I do not currently own shares in AAPL or RIMM.

Company:
BlackBerry
Website:
http://www.blackberry.com
Location:
Waterloo, Ontario, Canada

Research In Motion (RIM), a global leader in wireless innovation, revolutionized the mobile industry with the introduction of the BlackBerry® solution in 1999. BlackBerry products and services are used by millions of customers around the world to stay connected to the people and content that matter most throughout their day. The BlackBerry product line includes the BlackBerry® PlayBook™ tablet, the award-winning... more


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Knowlton Thomas

Knowlton Thomas

Knowlton is the managing editor of Techvibes. Based in Vancouver, Knowlton has been published in national publications and has also appeared on television and radio. Previously he was an editor for New Westminster weekly The Other Press and served on its board of directors. When not working, Knowlton enjoys playing tennis or otherwise enjoying the outdoors. more



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