Sirius XM Holdings Inc. (NASDAQ:SIRI) is one of the best cheap stocks to buy now to many investors, since volume is incredibly high in SIRI stock but the company is still a legitimate player with a $20 billion market cap.
After all, many cheap stocks are deeply unprofitable microcaps facing big volatility on small trading volume. But SIRI stock continues to show that it is a relevant media player even in a digital age.
The latest proof came from a powerful Sirius earnings report this week, including a big boost in its subscriber base and increased guidance.
A rally today in SIRI stock puts shares up about 30% from their brief February lows, and this strong earnings report hints that momentum may continue to the upside for some time.
Strong Sirius Earnings Lift SIRI Stock
The details on Sirius earnings are undeniably strong. SIRI stock added 587,000 net new subscribers, an 8% lift that brings its tally of total listeners to 30.6 million subscribers. Furthermore, revenue grew 10% to $1.24 billion and the average revenue per user rose 3% to $12.78; SIRI stock raised its forward guidance on sales after those strong top-line results.
To top it off, Sirius earnings showed strong profitability again in the second quarter, with earnings hitting $173 million compared with $103 million a year ago — or 3 cents a share compared with 2 cents in 2015.
Across the board, those are great numbers. But going forward, things should stay rosy as vehicle sales look to be their strongest since 2005, according to forecasts. SIRI radio hookups in new vehicles are a key driver of subscriber growth, and the rise and fall of Sirius earnings can almost always be correlated to the ebb and flow of auto sales.
When you take the powerful Sirius earnings results today along with the momentum behind SIRI stock since the 2016 lows, then add in the tailwind of strong vehicle sales? Well, it’s going to be hard to stop this stock in the next several weeks.
Presuming the market as a whole cooperates, of course. This environment continues to be largely risk-off, given the stretched valuations of utility stocks and staples companies … so tread carefully.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, he did not hold a position in any of the aforementioned securities.
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