Betting on the BlackBerryThe recession is a big challenge for Research In Motion (RIMM), but the maker of BlackBerry smartphones is coming through loud and clear. RIM posted better-than-expected results in its fourth quarter and predicted encouraging numbers for the next quarter. "Despite the recession, its growth hasn't slowed, says David Weissman, senior tech analyst at Zacks Investment Research, who rates RIM a buy. On Apr. 15 the stock jumped to 63.90, up from a 52-week low of 35 on Mar. 9. It hit 148 last June. The bears had predicted the weak economy would cripple sales. But that didn't happen because of "a shift in consumer preference toward feature-enhanced devices, away from ordinary mobile handsets used mainly for voice telephony," notes Weissman. That dovetails nicely with BlackBerry phones' e-mail and Web access. With 54% of the market, it's "the most powerful [smartphone] brand in North America," he says, and it's gaining share in Europe, Latin America, and Asia.
Ittai Kidron of Oppenheimer, who rates RIM outperform, says performance is driven by product launches (such as Storm, its first touchscreen device) and strong subscriber growth. He upped his profit forecast to $4 a share for fiscal 2010 (ending next Feb. 26), on sales of $14.5 billion, and $4.67 for 2011 on $16.4 billion, vs. 2009's $3.51 on $11.1 billion.
Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.Target Looks BulletproofThe recession continues to batter retailers, prompting most analysts to shun the group. Yet Target (TGT)has held up well: Shares closed at 38.55 on Apr. 15, up from 25 just a month ago. Target, whose 1,600 stores are popular for their "cheap-chic" merchandise, "has done a good job of managing expenses and inventory levels," says Robert Drbul of Barclays Capital, who rates it overweight. Its "strong franchise and solid customer loyalty remain intact," he notes. (Barclays did banking for Target.) "Target could post double-digit yearly average earnings growth over at least the next five years."
Mark Miller of investment firm William Blair rates it outperform even as he sees fiscal 2010 earnings easing to $2.32 a share from 2009's $2.86. For 2011, he sees earnings of $2.58. Target is a play on investor sentiment, which he expects to improve when consumer spending picks up.
Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.American Tower Stands TallThose spindly spires that seem to have sprouted up everywhere spell robust earnings for American Tower (AMT), the No. 1 operator of such communications installations in North America. AMT's shares are on fire, soaring to 32.45 from a trough of 19 on Nov. 21. AMT leases antenna space on its towers to wireless service providers and radio and TV companies, which sign 5-to-10-year contracts. (AT&T), Sprint (S), Verizon (VZ), and T-Mobile account for 60% of AMT's revenues.
Robert Becker of Cohen & Steers Global Infrastructure Fund, which owns shares, likes AMT's defensive nature, with 95% of its cash flow coming from long-term contracts. His 12-month price target is 40.
James Moorman of Standard & Poor's (MHP), who rates AMT a strong buy, says it benefits from wireless carriers' constant need to improve network quality and coverage.
Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.
Marcial writes the Inside Wall Street column for BusinessWeek. In 2008, FT Press published the book Gene Marcial's 7 Commandments of Stock Investing.