(This is an excerpt from an article I originally published on Seeking Alpha. Click here to read the entire piece.)
If you followed anything I have written about Research In Motion (RIMM), you know that the company may begin its latest massive share buyback as early as Monday, July 11. RIMM will buy up to 5% of all outstanding common shares. If previous history is any indication, the company will quickly purchase the entire allotment and bring about $1 billion of cold, hard cash to the table to accomplish the mission. If previous history is any guide, this effort will successfully force the stock upward and even prop it up for at least several months. In other words, RIMM is a screaming buy here, but the trick is when and how?
{snip}
…We will not get confirmation of renewed strength in the stock until it can close above its post-earnings high of $30.23 (the stock closed Thursday at $29.03). Once that happens, we can look to target a close of the post-earnings gap at around $35 for a first upside target over the next month or two. If RIMM instead breaks to fresh multi-year lows (below $25.80), we will know that something has gone terribly wrong with the gameplan. Also note that the overall stock market is extremely overbought right now – adding substantial risk to going long here. Plan your risk/reward setup accordingly.
Be careful out there!
(This is an excerpt from an article I originally published on Seeking Alpha. Click here to read the entire piece.)
Full disclosure: net long RIMM