Technology has always been the underdog sector on the TSX. Apart from a handful of prominent local names and a few across the border, investors don’t put much stock on the tech stocks. But there is a lot of potential in that sector — even in the wholly beaten-down stocks like BlackBerry (TSX:BB)(NYSE:BB) and Maxar (TSX:MAXR)(NYSE:MAXR).
The former cell phone company
BlackBerry had a great run as a mobile phone company, once upon a time. At the peak of its glory, BlackBerry boasted 80 million users as of December 2012. It was prized for its secure network and famous among politicians and business people. Now, however, the number is down to seven digits. At its peak, the company traded for well over $240 per share. Now its market value is in the single digits.
So, how can a company that has fallen so far from its peak be a good buy? The reason is simple. Because despite being strong-armed out of its primary market of cell phones, BlackBerry has started capitalizing on its core competency in another way. BlackBerry was famous for its safety and security protocols, and with that shield in hand, the company has entered the arena of the software industry.
This complete transformation of the business model hasn’t been an easy task. But BlackBerry has pulled it off and has set its sight on the future. BlackBerry is now providing software and services needed to secure the Internet of Things, which is the next step in how the internet is going to transform the world.
One example of BlackBerry’s now-successful penetration of the software market is the company’s software, QNX, being integrated into 150 million vehicles across the globe; this represents roughly 12.5% of the vehicles on the planet. If BlackBerry continues along the same path, with the advent of the Internet of Things, the company might see its former glory. Even now, it stands a fair chance of doubling up your investment by the end of 2020.
A technology company
Maxar saw one of the most depressing declines in two years, from trading in the mid-$80s in December 2017 to trading around $20 per share just last month. But the previous year saw a period of relatively high growth, and the company grew its market value by about 20% last year.
Maxar primarily focuses on space-based imagery technology. In past years, the bulk of Maxar’s pool of clients consisted of governments and government-based space agencies. But now Maxar is shifting its focus on smaller entities as well. Currently, space isn’t paying off, but when it does, companies like Maxar will be at the forefront of technological advancements and space-driven profitability.
Advancement in space-related technologies isn’t in some distant future now. At an estimate, about 102 satellites were launched in 2019. If we consider the launch plans of space agencies across the globe, this number may increase four-fold by 2025. With a growing pace of the space race, Maxar’s growth potential is also expected to increase.
BlackBerry and Maxar both are technology-oriented companies. The current market value might not be an excellent indication of what the companies have to offer. For this January, you might want to consider buying the dirt-cheap stocks of BlackBerry and Maxar. The chances of the companies doubling up your money by January 2021 are relatively high.
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Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends BlackBerry, BlackBerry, and MAXAR TECHNOLOGIES LTD.
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