Research in Motion (RIMM): Blackberry buy

"Suddenly, no one likes Research in Motion (NASDAQ: RIMM) any more, at least that's the impression you get from the media," observes Gordon Pape.

In his Internet Wealth Builder, the advisor looks at investor's "love-hate" relationship with this stock and offers his own bullish long-term assessment.

"To hear some analysts tell it, the BlackBerry maker is going the way of Nortel; it's just a matter of time.

"For example, analyst Jim Suva of Citigroup Global Markets recently issued a sell signal on the shares, saying that RIM's long-time dominance of the smart phones market is over.

"For the record, many analysts disagree with Suva's assessment. Credit Suisse has reiterated its 'outperform' rating with a target price of $95. Bank of America/Merrill Lynch has a $100 target, Scotia Capitalhas a $103 target and CLSA Asia-Pacific Markets has a target of $100.

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"RIMM has a long love/hate relationship with investors. No one paid much attention to the stock after it went public in late 1997 until it suddenly caught fire in 1999, gaining more than 2,800% in less than two years.

"Then the tech bubble burst and RIM came crashing down. In 2002, you could have bought shares for as little as $2.20. Don't you wish you had done so?

"From there they moved steadily back up to over $140 a share in mid-2008 before they were socked by the market meltdown that followed. Now they are trading for less than half that price.

"Can they go lower? Sure. That's why I stressed from the outset that this stock is only suitable for investors who can tolerate risk. If your stomach starts to churn on every piece of bad news, you don't want to be here.

"I recommended RIMM because I believed it had been oversold, and still do. The company has proven its resiliency before and I believe it will continue to do so. It has met every challenge with new and improved products. Why should that suddenly stop?

"Yes, its market share may drop. But the market itself is growing. The BlackBerry used to be seen strictly as a business tool; now it is becoming increasingly popular with consumers.

"The introduction of the iPhone had a lot to do with that and the Apple product is certainly a major competitor. But based on the evidence to date, I believe that RIM's sales and profits will continue to grow.

"However, the decision to buy back up to 21 million shares for as much as $1.2 billion sends mixed messages to investors. On one hand, the company is effectively saying that it considers the current market price to be too low and that a buy back is one of the best investments it can make.

"On the other, it means that a large chunk of money that could have been spent on staying a jump ahead of the competition is instead being used to support the stock price.

"RIMM's board of directors seems to feel the company can have its cake and eat it too, saying in a press release that 'a share repurchase program will not impact RIM's ability to execute its growth plans.

"Perhaps. But for a company that is facing the most aggressive challenges of its relatively young life, the buy-back has to be seen as a gamble.

"Despite my concern, I am maintaining my Buy rating on the stock. I thought it was cheap when I originally recommended it in September at $75. Well, it's even cheaper now. Just  remember, RIMM is not for the faint of heart."