Research In Motion (RIMM) dived into the consumer marketplace and found favor Thursday with investors, ahead of its quarterly earnings results. Shares were up 5% during early trading.

On Wednesday, RIMM launched its App World marketplace, marking a major move from its heavily business-oriented customer to a consumer market. Research In Motion is tilting at the audience for Apple (AAPL) iPhone customers with programs for its device that include entertainment, gaming, maps, personal navigation and social networking.

Wall Street analysts expect the maker of the BlackBerry line of smartphones to report fiscal fourth-quarter earnings of 84 cents a share, at the lower end of company guidance issued in December. The consensus estimate for the full year is $3.37 a share, a 49% increase from fiscal 2007. Peter Misek, an analyst with Canaccord Adams, wrote RIMM has added subscribers since late February and could show some surprising upside. We continue to believe that RIM represents a compelling investment based on the company s leadership in the still fast-growing smartphone segment, he wrote.

Bottom Line: Buy
BlackBerrys already dominate the top end of the business market, and the company is poised to make inroads among a wider consumer base.

CarMax Shares Get in Gear

Investors bought shares of CarMax (KMX) Thursday after the used auto dealer reported a surge in fiscal-fourth quarter earnings.

After revving up gains above 12% at the open, trading idled down to 8% or so, thanks, in part, to a classic short squeeze, in which investors betting on the stock s decline were forced to unwind short positions after an earnings announcement. As of March 10, 18.6% of the Richmond, Va.-headquartered company s shares were held short, an increase of 14 percentage points from the previous 30 days.

CarMax CEO and President Tom Follard said on a Thursday conference call that weak consumer demand continued to affect the company, which reported earnings of 17 cents a share. It earned 10 cents a share in the year-ago quarter, but that reflected a nine-cents-a-share financial restructuring charge in the company s finance arm. He said the weak economy remains the biggest obstacle to growth.

We remain as confident as ever in the CarMax model and our long-term growth opportunity, he said. However, if sales trends do not improve from the fourth-quarter levels, we would anticipate a double-digit decline in unit sales in fiscal 2010.

Morningstar analyst David Whiston called CarMax the best used-car shop around, but said the recession overshadows its strengths.

We are disappointed that store traffic was not as good as we had expected, he wrote Thursday. Comparable-store unit sales were worse than we would have expected, given the recent increase in used-vehicle demand. Still, gross profit and gross margin per vehicle increased from the prior-year quarter, which shows the firm is not willing to compete on price just to keep market share.

Bottom Line: Sell
Recent buyers can take profits in a stock that promises to be volatile for a while longer, but longtime investors will have to wait on a real recovery.

Investors Bid Up Rite Aid

Investors shrugged off symptoms of an ailing economy, reversing an initial drop in shares of Rite Aid (RAD) after the drugstore chain reported a wider-than-expected fourth-quarter loss.

The Camp Hill, Penn.-based retailer posted a loss of $2.67 a share for the quarter ended Feb. 28, though $2.10 was related to acquisition costs for the Brooks and Eckerd chains, which Rite Aid bought in 2007. A combination of dwindling consumer spending and decreasing reimbursements from Medicaid and Medicare have hit drugstores hard, and Rite Aid s $3.4 billion purchase of its rivals hasn t helped the company. Shares dropped as much as 92% in the past year, and were down about 86% after Thursday s pop.

The company plans to shut its Atlanta distribution center as a cost cutting and consolidation measure, and closed 19 stores in the last quarter. Chief Financial Officer Frank Vitrano said Thursday that cutting debt will be a top goal for fiscal 2010. Rite Aid negotiated a $225 million refinancing in the last quarter. The ongoing credit crisis increases the importance of lowering the company s financing costs.

Although we still have 18 months before our September 2010 credit facility renewal, we are talking with our bank partners to explore refinancing options, he said on a conference call.

Mitchell Corwin, an analyst at Morningstar, says changes to prescription drug reimbursement have made volume a key to drugstores success, as the margins on that business have shrunk sharply. That increases the stakes for the success of Rite Aid s expansion. Strong execution going forward will be paramount as the company carries significant debt, and, though we don't see an immediate liquidity problem, the firm will have to turn around the business while macroeconomic trends work against it, he says.

Bottom Line: Hold
The stock price is so low and macro factors have played so large a role in getting it to that point that it s worth holding on for signs of a broader substantive recovery.