The Investment Case for Research In Motion as a 'Buy'

RIM is late with OS 10 resulting in fewer choices in what RIM can market. The upside with selling older phones is they are fully paid for from a research-and-development point of view. RIM recently reported a new BlackBerry on sale in India.

India also tends to become lost in the non-stop conversation about China. It shouldn't be that way as India is the most populous democracy in the world and about to become the biggest market in the world. According to Reuters, the Curve 9220 went on sale in India last week and will soon be sold in other countries including Indonesia.

With 70%-plus of sales (and climbing) coming from outside Canada and the U.S., North America is fading in importance for results. A weak perception of RIM may drive the stock price lower, and a look at a price chart for RIM validates a weak prognosis. RIM is currently trading at $14.03. At the current price, investors can buy shares for only eight times expected earnings and only 6.4 times the past 12 months' earnings. This makes RIM a "buy," especially as a covered call. I like the idea of collecting option premium and lowering my overall risk at the same time. The downside to writing covered calls is if RIM receives a buyout offer. Some gains are likely to be left on the table, but, even so, RIM is likely to bounce higher with any news of a takeover or improvement with smartphone sales.