A 30-Bagger You May Want to Avoid

Yes, shareholders of Sirius XM (Nasdaq: SIRI  ) : There is a Santa Claus, and his name is John Malone, chair of the Liberty empire. He saved Sirius from total ruin nearly two years ago by investing in the company just days before it would have gone bankrupt. Sirius stock has been on a tear since then, rising from about a nickel per share to more than $1.50 today -- a 30-bagger in less than two years. It doesn't take too many of those before you own a Caribbean archipelago.

But that stunning performance is NOT a reason you should be thrilled to own the stock now. In fact, you should do everything in your power to avoid getting warm fuzzies about that massive run-up. All that matters now is the future and whether the stock has priced that in.

Don't look back, I heard you say
So is Sirius a 30-bagger from here? Not likely. The company is already well too big with a $6 billion market cap. And there are some serious challenges for the satrad company, such as Pandora, which allows listeners an infinite variety of music at the low, low cost of free. And it's making its way onto Sirius's home turf, too: automobiles.

Finding the outperformers of tomorrow means looking where others aren't -- steering clear of some of the most popular stocks, and focusing on the future, rather than the past. So let's look at five very popular stocks right now and see why they're not likely to be massive gainers.

YRC Worldwide (Nasdaq: YRCW  )
YRC's market cap sits right in a sweet spot for 30-bagger returns, at just $166 million, giving it plenty of room to ramp up. But this trucking company has taken a wrong turn. Its small size is not a hopeful sign but rather the market's more somber expectations for the company's survival (or lack thereof). From a split-adjusted price of more than $1,400 per share, the stock now sits at sofa change ($3.50). And recent moves are not very encouraging. The company has renegotiated its loans 19 times, yet all the cash it can generate still flows to the banks that made those loans. Over the past year, more money has gone to interest than comprises YRC's entire market cap. True, if YRC had a way out of its conundrum, the stock would rally hard. But things look pretty bleak right now.

Chimera (NYSE: CIM  )
You'll never get a 30-bagger out of Chimera by waiting on capital gains, since the real-estate investment trust pays out almost all of its income as a dividend. So at its 16.5% yield, you'd have to endure about 22 years to get your 30-bagger, if you could reinvest all your dividends at that rate. But you can't. Chimera, which makes its money on the interest rate spread between short and long rates, does well in lean times like now. When times get more flush and rates go up, things will get tougher for Chimera; its payouts will fall, and so will its stock price. So don't look at Chimera's past yields; instead, look at its future yields.

Allied Irish Banks (NYSE: AIB  )
Allied Irish and YRC are in good company: They're effectively owned by their creditors. Allied was effectively nationalized last month, with the Irish government boosting its stake to 49.9% after investing 3.7 billion euros in the bank. That percentage will jump to nearly 93% as soon as the bank divests its Polish unit. The bank is required to raise 6.1 billion euros before March, and it is trying to buy up its junior bonds at a 70% discount to par in a bid to boost its capital ratio. Allied has penny-stock appeal, with shares at less than a buck. But the ongoing uncertainty in Ireland, along with austerity measures hurting the overall economy, makes an investment here little more than a gamble. This knife is still falling, but someday things will be clearer.

Altria (NYSE: MO  )
Like Microsoft, Altria has been a massive gainer over the past few decades. Since 1970, it has returned 155,300% (dividend-adjusted). That's all well and good, but what have you done for me lately? Plenty, in fact. Since the start of 2009, it has returned 84% (dividend-adjusted). Altria has bumped its dividend up 11.8% in the past year and has promised to pay out 80% of its net income in the future. And smoking rates in the U.S. seem to have bottomed around 21% for the past half-decade -- more relatively good news. But with a stagnant market, Altria's size, and its dividend focus suggesting that its growth days are gone, this stock is not your father's Philip Morris.

So Altria's not going to be a 30-bagger any time soon. Big deal. Does it really matter when the company shells out such a huge and growing dividend? Let income investors have their peace...

SodaStream (Nasdaq: SODA  )
Yes, SodaStream has its admirers. The company's products allow you to create your own carbonated soda or water, and I'd drink the bubbly water any day over the still. Some investors see SodaStream as the next Green Mountain Coffee Roasters (Nasdaq: GMCR  ) , but Green Mountain offers coffee that is cheaper than its premium peers and more convenient. In contrast, SodaStream offers a more expensive product than even name-brand sodas. Green Mountain has been a 30-bagger within the past decade, too.

Still, with SodaStream's recent entry into the U.S., it's not hard to see the stock growing from here, even if it's already priced at 35 times earnings. A few quarters of decent sales growth could really make this into an investor darling. But a 30-bagger from here? That would put the company at a $21 billion market cap, and if the market were that lucrative, you'd see copycats come along well before, distributing better-tasting flavors and compatible CO2 carbonators.

Where is the next 30-bagger?
To get the 30-baggers of tomorrow, you need to search for small caps that have a sustainable competitive advantage. Even better would be a value-priced company that is stealing top talent from the industry leader. In a special free report titled "The Motley Fool's Top Stock for 2011," we reveal a little company set to profit from the broadband Internet expansion. Get instant access by clicking here -- it's free. There's no guarantee that the stock will be a 30-bagger, but it is poised for greatness.

Jim Royal, Ph.D., does not own shares of any company mentioned. Green Mountain Coffee Roasters is a Motley Fool Rule Breakers selection. The Fool owns shares of Altria. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (62) | Recommend This Article (50)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 18, 2011, at 10:39 AM, jrod87 wrote:

    FBP and UWBK are the next 30-baggers-jrod

  • Report this Comment On January 18, 2011, at 11:05 AM, chris100000 wrote:

    Uhhh...

    Motley Fool used to be an informational site...now it seems like the writers are feebly attempting to protect their own short-sighted interests. Motley Fool and it's CAPS give four and five stars to companies like American Oriental Bioengineering (AOB) which is run by a thief. They trash companies like SIRI which have fantastic earnings potential. A 30 bagger from here? Not soon. But followers of the above article may as well gamble their money in Vegas just as soon as put it in risky stocks like the aformentioned. There is merit to Altria. The others are garbage.

  • Report this Comment On January 18, 2011, at 11:10 AM, siriuslyrick wrote:

    Pandora is a serious challenge to Sirius?

    Where have you been the past year? Sirius has a huge edge in its satellite delivery model, and is now a serious challenge to Pandora on Pandora's home turf. When users start having to pay for hogging huge chunks of bandwith, Pandora will die a natural death.

    Where do you get your "information" anyway?

  • Report this Comment On January 18, 2011, at 11:15 AM, siriuslyrick wrote:

    um....bandwidth. Sorry, rented fingers.

  • Report this Comment On January 18, 2011, at 11:19 AM, 67vair wrote:

    Pandora, free? Not really and MF has no clue about SIRI. It's all about content and Pandora has none.

  • Report this Comment On January 18, 2011, at 11:20 AM, landoncz wrote:

    Jim, you're argument has a few flaws:

    GMCR does NOT always offer coffee it cheaper than it's peers, a "good" price for K-cups is about $.50 a cup, whereas a lb. of coffee is about $8 (I think most people can make more than 18 cups with a lb of coffee). Want to make coffee for more than one person? -- that will require a cup per person, if you have four people wanting coffee at the same time, that's $2... The argument for GMCR is for convenience, NOT price...

    SODA is more akin to the invention of the traditional-style coffee maker, whereas before there was NO option to make coffee at home at all. Before, if you wanted coffee, you had to buy it pre-made from the store... The argument for SODA is that it gives consumers the ability to do something that they could not do at all before... which is not like GMCR at all...

  • Report this Comment On January 18, 2011, at 11:35 AM, tjtoretire wrote:

    The truth is any talk regarding Pandora or a possible IPO only brings added awareness (advertising) in favor of Sirius XM. SATRAD has so many advantages over intenet radio that comparing the two only illustrates how much better a product SiruisXM is.

    Sirius a repeat 30 bagger? Maybe not short term. When Sirius 2.0 is released later this year look for $4 or $5 share price. From there it all depends on the functionality not yet released.

    Sirius has become a profit generating machine MF. Stay tuned for earnings release next month and then write about Sirius' steady improvement to the bottom line and subsequent increased SP.

  • Report this Comment On January 18, 2011, at 11:56 AM, jrod87 wrote:

    why are we talking about sirius??when we could be talking about FBP and UWBK (This place can be a pumpoer paridise if my name had TMF as a header)

  • Report this Comment On January 18, 2011, at 12:08 PM, siriuslyrick wrote:

    I suppose it's because Jim is talking about Sirius, and some of us have information he doesn't seem to have, or at least have a very different view of things.

    So, talk about FBP and UWBK. What information do you have to share?

  • Report this Comment On January 18, 2011, at 12:12 PM, DOUGTHEMAN wrote:

    Look, I know you have every right to speak your mind and say what you like but after a while it becomes obvious that you have some type of axe to grind with SIRI. When it gets to a point where I expect to find negative articles on one specific company analysis, there is a significant loss of credibility across the board. The fact is that although pandora poses a significant perceptive threat to SIRI the fact remains that they cannot stay solvent giving product away. At some point they will have to find ways to be financially stable to compete long term.

  • Report this Comment On January 18, 2011, at 12:16 PM, nazareth2 wrote:

    Why when the company wasn't showing any profits and when there wasn't as many subscribers the stock was at $3.00 a share?How can anyone now say the stock is worth less then that? They have to be an idiot.This stock will continiue to edge higher and higher,right before your eyes...

  • Report this Comment On January 18, 2011, at 12:17 PM, David369 wrote:

    I think Jim R. meant GMCR offers coffee cheaper than Starbucks (that it's peers are premium coffee stores). I don't think I would agree with that, ie peer being Starbucks. No way is it cheaper than maxwell house or folgers but it is quicker & easier to find a unique/different flavor from the 200 plus to choose from even if they may or may not be a good as starbucks or what have you. Heck, most anything would be cheaper than starbucks. I think the Keurig coffee maker is like the Mr Coffee was 20 yr ago or so. New home coffee fad. Of course, they still sell Mr Coffee makers don't they?

  • Report this Comment On January 18, 2011, at 12:23 PM, Qsela34 wrote:

    The times, they are a changin'...

    2 years ago... Sirius is/will be/was bankrupt!! sell, sell, sell

    (Motley Fool)

    1 year ago... Sirius is a sub $1.00 penny stock, heavy debt, too many shares outstanding, not out of woods regarding bankruptcy

    (Motley Fool)

    Present day...Sirius is a +$1.50, a 30 bagger, but won't explode again to higher highs. Pandora, ALL HAIL PANDORA !! Internet radio..FREE, FREE, FREE!!! blah, blah, blah

    (Motley Fool)

    1 year from today...Sirius is recording record numbers of subs...so what, internet radio is right around the corner. Sirius is +$3.50 with record revenue and lower debt...who cares, Pandora is FREE!

    (Motley Fool)

    2 years from now....Sirius is the #1 subscription based service. better than Comcast, Netflix, etc..etc..+$6.00 stock price....big deal Pandora has 100 million users (of which maybe 15% are unique and active, and of those maybe 10% are paying) we'll leave those numbers out though...IT"S FREE!! blah, blah, blah

    (Motley Fool)

    3 years from now...Sirius IS global.

    I can't wait to hear what they have to say then...BUY, BUY, BUY all Hail Sirius/XM...I knew it, I called it, you should have listened to us.

    (Motley Fool)

    No Thanks.

    The Times, They are a changin'

  • Report this Comment On January 18, 2011, at 1:15 PM, 666thebeast wrote:

    I personally avoid cigarette co , Altria , feeding off the mostly poor and at $7 a pop! SHAME Howard and Martha can have Siri , sold mine after a $400+ attempt by the co, for my car radio per yr. - No radio is worth that ( sold 5K shares) Siri does not have that many paying subs. as they claim. SIRI is a scammers stock- see past acts . Soda stream - didn't we used to have co2 dispensers 30 yr ago - whats new here ?(might be some new upstart sodas from it though) coffee -never been to starbucks- I can make coffee

    Pandora - never heard of it

  • Report this Comment On January 18, 2011, at 1:19 PM, mattsmithsd wrote:

    Sirius will be GONE when internet is streamed to vehicles. Pandora offers the best music to ones own liking. Sirius is crap and the stations never have anything good on them. I was happy when the 6 months free subscription ended on my vehicle. Then they started begging me, day after day, to sign up with them. The lady was trying to get me to sign up for $1 per month but I told her no thanks.

    Pandora is transmitted through my radio every time I drive.

  • Report this Comment On January 18, 2011, at 1:24 PM, siriuslyrick wrote:

    SIRI, bought mine at 93.6 cents, and happily pay the small monthly fee for my portable set, which gives me commercial-free satrad at home, in my car, and at work.

    Debt reduction and consolidation, significant credit rating upgrades, profitability, included in the majority of new vehicles sold, and no serious competition -- sounds pretty legitimate to me, and obviously to many others who actually should know something about it, and who don't necessarily have a Ph.D.

  • Report this Comment On January 18, 2011, at 1:25 PM, toomany4gong wrote:

    Pan-what?

    SIRI/XM = BMW, Mercedes, Gucci, Prada

    Pandora = Clunker, Kmart, 7-11, TjMax

    Not gonna impress anybody. It's a different game now!

    Pan-what?

  • Report this Comment On January 18, 2011, at 1:28 PM, toomany4gong wrote:

    No SIRI/XM = Can't afford it!

  • Report this Comment On January 18, 2011, at 1:29 PM, dubyaisafairy wrote:

    pandora (or like I say pandumpa) is a cheap fad pile of crap. there is no mutual exclusivity of internet streamimg and SIRI you idiot. They can do it if necessary much bigger and far better. SIRI is gonna make the savy (to quote Star Trek) "rich beyond the dreams of avarice." Go ahead...miss the boat...you'll be sorry, and I'll be laughing all the way to the bank at ya. Kids...they all think the next fad internet app is gonna rule the world. Grow up.

  • Report this Comment On January 18, 2011, at 1:33 PM, siriuslyrick wrote:

    And kids all think that they will have unlimited internet access forever for whatever flat montly fee they pay right now for their wifi or 3/4G gadget. Guess what? Infrastructure costs money, and that bandwidth is not infinite. Sirius can already support what we may as well call an infinite number of subscribers.

  • Report this Comment On January 18, 2011, at 1:47 PM, ItAintCool wrote:

    There is a deliberate and concerted effort by most of the writers at MF to pump Pandora and dump SIRI. Why? Because cash-strapped Pandora is now planning an I.P.O. and MF is planning to play all the angles. Pandora is desperate to raise cash before the lack of Net Neutrality laws drive them into non-existence or force them to become an all paid subscription service, which in turn will bring about their end since SIRI already does that with a better service, more programming content and an already 20 million and growing subscriber base. Either way the word "Free" that MF and other pumpers love to tout about Pandora will soon be disappearing. And it won't survive when people have to pay for its service, whether through subscriber fees or higher wireless data charges (BTW did anybody notice that Sprint announced they're raising their data plan fees by $10?).

    These fools (and whoever they're working with) have got to have some vested interest in getting Pandora public, but once it does, they're going to be taking it down. Trust me, the stock won't go up. If you think SIRI has been shorted and manipulated by those who don't want it to succeed (such as the N.A.B. and every terrestrial radio company), wait until Pandora goes public. It doesn't matter that Clear Channel has some vested interest in the company (CC is already struggling to survive), every other terrestrial broadcaster will consider it a threat, because it competes more directly with their business than SIRI does. Market Makers will short it because it will easier to take it down than build it up, they know the fundamentals do not show a business model designed to survive. But MF and other financial media outlets will pump it, so that the blind and trusting retail investors will buy this stock without doing proper due diligence. But it will be shorted until it hits the pink sheets and then declares BK. They will win and you will lose.

    As Qsela34 said now, and I have said in past comments. For 2 years everybody at MF has told you not to buy this stock (except for Rick Murraniz, who changed his tune just after the price hit the all-time low). NOW they're willing to admit it's a 30-bagger. But this fool still tells you not to get in because it's too late (which it isn't). The problem is he never told you to get in the first place! Instead, he and other deluded Fools have been touting Pandora for the past year. Before that, they questioned the ability of SIRI to get out of the sub -$1.00 stock status. Now that SIRI has done that and has shown profitability, free cash flow, increased subscribers, the ability to pay down its debt and a solid OEM base, they have changed strategies. It's hard to take down a winner when its on top, so its easier to create an imaginary threat that can supposedly destroy it. That imaginary threat is Pandora.

    As I said before, imagine if Jim Royal was my financial adviser, and he told me for 2 years not to buy SIRI stock after hitting its all-time-low in the single digits, when I wanted to get in. And then, he continued to tell me not to buy it as it went higher and higher. He would have made me miss one of the best and easiest investments that anybody could make with just a few dollars. Well that's exactly what he has done (and refuses to admit). He's calling it a 30-bagger because it is a 30-bagger, not because he predicted it would be. So with all that bad financial advice, I would not want him as my financial adviser. Would you want to take advice from somebody this wrong for 2 years?

    It you want good advice about SIRI stock, go to www.satwavespro.com . Not the tripe that MF spews out.

    Long on SIRI

    Short on MF

  • Report this Comment On January 18, 2011, at 2:07 PM, ItAintCool wrote:

    666thebeast wrote:

    Howard and Martha can have Siri , sold mine after a $400+ attempt by the co, for my car radio per yr. - No radio is worth that ( sold 5K shares) Siri does not have that many paying subs. as they claim. SIRI is a scammers stock-

    LOL! $400 for a yearly subscription? Was that in Hong Kong dollars? Because otherwise you've proven that you are a complete and total liar, and pathetic short. How does $13 a month = $400 a year? And that means everything else you wrote is complete BS as well. Go back to crying over the money you lost shorting the stock.

    SIRI has 17 million PAID subscribers. It is reported, documented and verified. 50% of people who get the free subscription with their new and used cars keep paying for it after the free trial ends. That is also reported, documented and verified.

    Your post=FAIL:

  • Report this Comment On January 18, 2011, at 2:18 PM, Austin77478 wrote:

    @Mattsmithsd! "The lady was trying to get me to sign up for $1 per month but I told her no thanks." Just listen to your lies! BTW, why are you still concerned about Sirius? Do I smell a skunk?

  • Report this Comment On January 18, 2011, at 2:30 PM, SiriusAboutGold wrote:

    Jim,

    What are your thoughts on GOLD?

    -Liz

  • Report this Comment On January 18, 2011, at 2:37 PM, siriuslyrick wrote:

    Yes, I'd be interested in thoughts about gold too. Given that gold production globally has been in decline for almost a decade (yes, they ain't making any more) and new discoveries are not keeping up with use, given that gold is more than a base for trinkets as it is used in a variety of industrial and commercial products, and given that it has had an enormous price runup in recent history, what is the future of gold prices?

    From the time I started following gold prices, it has been far more than a 30-Bagger. Is there more to come?

  • Report this Comment On January 18, 2011, at 2:55 PM, ItAintCool wrote:

    The man missed the 30 bagger that was SIRI. Do you think his thoughts on Gold will be any more valid?

  • Report this Comment On January 18, 2011, at 3:36 PM, siriuslyrick wrote:

    I was just going to do the opposite of what he recommended ;-)

  • Report this Comment On January 18, 2011, at 5:02 PM, mikecart1 wrote:

    For those dissing Jim Royal, you obviously forgot about the epic article he wrote last year where he predicted a stock rise and the next day that stock was acquired by some other company for huge bucks. Shareholders that listened to Jim Royal made mad money.

  • Report this Comment On January 18, 2011, at 5:21 PM, siriuslyrick wrote:

    And yet he missed out on Sirius' 30-bagger, so evidently he is not perfect.

    And, from what I read above, he clearly has no understanding of the fundamentals of satrad.

  • Report this Comment On January 18, 2011, at 5:22 PM, doubting wrote:

    Jim,

    Everything you are saying about siri using MF lexicon can be termed collectively as BALONEY. You offered zero facts and you will be slammed so hard by siri performance that you will remember it for the rest of your life. The company is on a huge roll and no matter how hard you and the likes sweat to smear it you will fail in a disgrace. Siri may double this year, and in 2012 it will be at least a $6 stock. FOR MERIT. I am ready to discuss with you each and every eight upcoming Q's till the end of 2012. Let us see who is right and who is wrong.

  • Report this Comment On January 18, 2011, at 5:22 PM, warrenrial wrote:

    Found Pandora far better than Sirus and will continue with Pandora. Glad I made the switch.

  • Report this Comment On January 18, 2011, at 5:43 PM, BioBat wrote:

    Anyone who made out with a 30-bagger on Sirus - good for them.

    And it's great to hear that as subscribers, by and large, you're happy.

    But to play Devil's advocate for a minute, a 50% retention rate amongst those trying the service (in new cars) is good but it's not out of this world, fantastic. Essentially, that means half of the people who try the service don't see any value in it. I would think that suggests the ceiling on Sirus is lower than some of you might think - after all, how often are you convinced to try something again after you've already tried it and don't like it?

    Not a subscriber, no positions and no intention of doing either just adding some food for thought.

  • Report this Comment On January 18, 2011, at 5:45 PM, multi007 wrote:

    First to get pandora into your car, the delivery system used would be your smartphone. This means the cell phone provider is providing for this bandwidth - although small - for free.

    So the pandora concerns are, with "free" means "you cant complain about the quality". With "free" means you can be charged in the future. With "free" means you cant get high quality content. With "free" means pandora could become "advertising supported".

    Pandora through cellphone network. SIRI via Satalite. I wonder which one has better quality? My bet is on satelite.

    @warrenrial - why was pandora better? Please explain.

  • Report this Comment On January 18, 2011, at 5:47 PM, siriuslyrick wrote:

    I like the fact that I can drive to my favorite flyfishing lake, completely out of cell range (and Pandora range, in case you didn't get that), and still listen to my favorite music and other programming on the Sirius radio while I'm driving. Heck, I could even listen to it in the boat if I wanted to. I also like the fact that I can go for a drive almost anywhere and not have the dropouts that Pandora and others have.

    What I did find better was when I switched from my satellite dish TV to Sirius. All I ever did was listen to the music anyway, and I can have the same Sirius set in my house, car, truck, workshop, and office.

    And I very much like the fact that I pay a flat monthly rate, and will not have to pay the forthcoming data usage charges for Pandora and so on, which are about to kill anyone's enthusiasm for Pandora.

  • Report this Comment On January 18, 2011, at 5:54 PM, eldetorre wrote:

    The only place that Sirius makes sense is out in the boondocks away from any internet connectivity. It isn't Sirius vs Pandora, It's Sirius vs the internet. Internet tech is scaling up everyday and at a minuscule cost per end user compared to Sirius'. Satellite radio is just an insanely expensive, limited, proprietary content delivery system. Satellites have a limited life too.

  • Report this Comment On January 18, 2011, at 6:02 PM, siriuslyrick wrote:

    Sirius makes sense for anyone who wants the content. And Sirius is already USING the Internet, in case you hadn't noticed.

    And another thing that many people seem not to have noticed is how precious and scarce bandwidth is already becoming.

    Does anyone really think that this "free" service will continue? If so, I have a bridge somewhere in the boondocks to sell you.

    I'd appreciate a thorough analysis supporting your thesis that satellite radio is "insanely expensive." 17 million paid subscribers seem to disagree with you, as do more people all the time.

  • Report this Comment On January 18, 2011, at 6:04 PM, multi007 wrote:

    Just read some Pandora FAQ's....

    So, they have a 40 hour cap per month or then you pay 99 cents to cover the rest of the month.

    Or "Pay $36 to upgrade to Pandora One for one full year. Pandora One, our paid subscription service, has unlimited listening hours every month, no advertising, no daily skip limit, higher audio quality streams, and several other benefits."

    So Pandora, for now, charges $36 annually? Interesting... That's not free. SIRI has to pass along a music royalty fee to the customers, Pandora will must likely need to do the same (unless the aforementioned fees are inclusive of this fee).

    It appears that Pandora IS advertiser supported for free listeners. The whole reason I went with SIRI is to avoid advertising. "Non stop continuous music" is what I pay for. Other bonuses that make me a SIRI fan and not a Pandora fan is the ability to listen to CNBC, FOX, CNN, and MSNBC cable stations in my car. Pandora doesnt offer that.

    SIRI/XM 2.0 = no one knows what it consists of quiet yet, but I keep hearing that "2.0 could be a game changer". Who knows what that means. TV in the car? Not a game changer for me as I am a single driver and not a passenger - so i wont be watching tv while driving. Who knows what's up SIRI sleeves... more channels? That's a given, but it could only get better.

    Improved car sales figures will only improve SIRI subscribers.

    Improved employment = same as above.

    Im not feeling the pandora vibe yet. Id love to know more details about pandora though... How about an article about "Why Pandora could be a SATRAD killer"

  • Report this Comment On January 18, 2011, at 6:04 PM, Joemit wrote:

    Long SIRI because it can make a profit, bought AIB on recommentdation and lost 90%.

    Go figure

  • Report this Comment On January 18, 2011, at 6:19 PM, audie116 wrote:

    I am one of the 50% who didn't continue the service in my Chev Silverado. They have very poor satelite coverage in the North. I live in Washington State and loose the signal behind every other tree and every mountain.

    Try going over one of our cross state mountain passes and you would dump the service also. I do regularly and gave up on it. They offered the service for half the price and I said no. Won't use it so even half price is no bargain.

    Don't own the stock and never have. Listening to all the chatter on here doesn't clarify a thing. Zealots in support of don't out way my personal experience. If I lived in Kansas maybe it would work better.

  • Report this Comment On January 18, 2011, at 6:24 PM, nopilgrim wrote:

    I'm long on SIRI - as a mom who drives a lot with kids, there is simply no other service that offers the children and family programming that Sirius does - commercial-free! I agree with Siriuslyrick - it gives you access when out of cell range. But, then, I can afford the service....just like I can enjoy a Starbucks now and then.

  • Report this Comment On January 18, 2011, at 6:40 PM, siriuslyrick wrote:

    Interesting comment from audie116, as I have exactly the opposite experience in the North with mountain passes and so on. It has been extremely reliable in areas where Pandora would be, well, nowhere. That's why I continue my subscription, although I'll have to talk with audie116 about how to get that half price offer. Full price is still great though!

  • Report this Comment On January 18, 2011, at 6:47 PM, stan8331 wrote:

    I'm a fan of Pandora, but I do not see it as being a dangerous competitor for Sirius. Vastly more limited content, clunky car connectivity options, bandwidth intensive for cell phone tethered connections.

    Pandora is a viable music option for the home or office. I've yet to see any evidence it can do significant damage to Sirius in the automotive market.

  • Report this Comment On January 18, 2011, at 7:08 PM, siriuslyrick wrote:

    Thanks for the breath of fresh air, stan8331. Your comments certainly get past the hyperbole, and are quite rational and reasonable.

    Although I listen to Sirius at home and in the office, I can certainly appreciate how Pandora could be an option at present for non-mobile uses in areas with good cell coverage/wifi availability. That, of course, includes areas where most people live and work.

    If in fact Pandora is about to be subjected to data usage fees, so that the cost goes beyond the monthly service provider charge for the cell/wifi connection and the other charges for Pandora pointed out above, at what point would you consider either switching to Sirius, to some other provider, or simply stopping?

  • Report this Comment On January 18, 2011, at 7:37 PM, ItAintCool wrote:

    multi007 wrote:

    "Im not feeling the pandora vibe yet. Id love to know more details about pandora though... How about an articl e about "Why Pandora could be a SATRAD killer" "

    Sadly multi, that's all that MF has been writing these days when it comes to SIRI. Unfortunately they don't have the facts to back it up. Just a lot of hyperbole. These are the three core arguments MF writers use, as follows;

    1) Pandora is free.

    2) Pandora has over 60 million subscribers compared to SIRI's 20 million.

    3) Sirius Sat Radio Technology is old compared to internet radio.

    To address and rebut each of these issues;

    1) Pandora is free.

    As you stated in your post Multi, no it isn't. It's free for up to 40 hours a month before you start paying. Or you have to pay the $3 a month subscription cost. I listen to SIRI about 4-6 hours a day. Which means that I would have to pay for Pandora within 8-10 days of listening (which is doubtful because they don't have any programming other than music, and I would prefer to hear my music commercial free).

    And to answer your question; Pandora is already paying music royalties. In fact they reported that in 2009 they paid 26 million dollars in royalties out of a total earnings of $48 million. Which means that more than half of their earnings are going to pay for music royalties. That doesn't sound like a good business model when you haven't considered that the other $22 million has to go towards the cost of operating the company and its service. Eventually that music royalty fee is going to have to carried over to the consumer if they ever want to show a real profit. When it does, you will see a greater exodus of listeners, because free internet radio won't be free any longer.

    This leads us to the point that we have the issue of no net neutrality when it comes to wireless carriers. The Supreme Court and the Republican congress already support no net neutrality. So in the short and long run, consumers will have to pay for the bandwidth that you are sucking away from your wireless internet provider if you use too much of it. The wireless carrier can simply limit streaming access to Pandora or other streaming music apps unless Pandora pays for said bandwidth (which they'll pass along to the customer), or the wireless carrier will directly pass it along to you as an extra data charge. Oh, and if anybody scoffs at this idea, Sprint just announced today an extra $10 fee for their Smartphone plans. So congratulations Sprint customers, you'll be paying for the bandwidth of the extra streaming music smartphone applications whether you're using them or not.

    Expect the other wireless carriers to start following Sprint's actions shortly. But if there's ever a consumer revolt against the higher fees, and the wireless carriers relent, they'll just start charging the companies that are hogging up the bandwidth with their streaming applications and have them pass it down to you in the end. So in the end, how many people with Smartphones are going to want to pay for commercial filled music with a high data charge when they can get that for free over their existing radios?

    .

    2) Pandora has over 60 million subscribers compared to SIRI's 20 million.

    Pandora "claims" to have over 60 million subscribers. But they consider a "subscriber" as anybody who downloaded their streaming app to the computer or smart phone and turned it on. Basically, anybody who ever tried Pandora for sheer curiosity is a subscriber for life. It doesn't say if that person continued listening to it once they turned it on the first. It does not say if that person perhaps set up multiple accounts, simply because they didn't want to pay the .99 cents once their 40 hours was up. Pandora is not reporting churn figures because nobody needs to contact Pandora in order to stop listening to them. And as a private company they are not obligated to report such figures..

    On the other hand SIRI does report its churn rates every quarter. It happens to have one of the lowest churn rates (1.8%) in the business for a paid subscriber business (I think Netflix is lower).

    Which leads to the other aspect of their 60 million subscribers Pandora claims? How many of them are "paid subscribers?" If the company is making a gross earnings of 48 million in 2009 that means that at best they had 1.3 million paid subscribers. But that is impossible, since that would mean that their entire revenue stream came from the paid subscribers and not advertising. Realistically I would guess Pandora has 800,000 to 900,000 paid subscribers and the rest of the money comes from advertising.

    Now let's compare that to 17 million paid subscribers (out of 20+ million total subscribers) who are currently listening to SIRI-XM. Pandora's numbers pale in comparison. Sirius has already penetrated the OEM car market, internet radio is just barely scratching the surface. Car makers will not give up installing their OEM sat radios anytime soon. Why? Because they make money on each Sat Radio subscription as well. They are not going to make money on Pandora, even if they do provide internet radios installed in their vehicles. At best you'll see car companies providing Sat Radio standard and internet radio as an addition (and more expensive) option.

    Of course, if Pandora does go public, they won't be able to cook the books on subscribers like they're currently doing. But we'll have to wait and see.

    3) Sirius Technology is old compared to internet radio.

    As "old" as it may be, it is still more reliable. You don't hear about major drop outs in service, or dead zones, unlike wireless internet providers whose service can drop at the turn of a corner. Sat Radio's major weakness is covered areas like tunnels and underground parking.

    In the meantime, SIR-XM has already announced Sat Radio 2.0. for the end of this year. While we don't know exactly what it will be. It will certainly keep the service more up-to-date in this ever changing world of new technology we live in. However the writers at Motley Fool (except Rick) seemed to have completely (and deliberately) ignored that. They also seemed to have completely ignored that SIRI-XM already provides a smartphone streaming application and it includes far more and far better programming choices that Pandora, I-Heart or any other music only smart phone streaming application.

    SIRI's subscriber base will increase at a rate of at least 1 million new paid subscribers per year (at a minimum). Pandora will have to reduce it actual subscriber rates to truthful figures once it does go public.

    In the end MF will continue to pump Pandora as the SATRAD killer. It's in their vested interest to do so. But for all their hyperbole and promotion of Pandora while attacking SIRI, it all comes down to the numbers and SIRI has them and Pandora doesn't.

    Invest in Pandora at your own risk.

  • Report this Comment On January 18, 2011, at 8:03 PM, 702nitro wrote:

    Everyone on the Pandora bandwagon provides valid reasons for choosing Pandora over Sirius.

    However in the long term (3-5 years), how viable is the model of tethering through a smartphone. Why is ATT offering 3G data plans for the iPad, when users could just tether their smartphones instead?????

    Remember when we had to connect our portable CD players to our cars? What about tethering mp3(iPod) players to the dash?????

    The trend indicates that consumers will want to drift away from any intermediary device to get their music and content; All of which Sirius provides and will rival "personalization" in the near term when Sirius 2.0 is released to the public.

  • Report this Comment On January 18, 2011, at 9:14 PM, pete163 wrote:

    Hey M,Fools get a load of this! Regulators Approve Sirius Satellite Radio In Hawaii and a hole lot more is coming. I think i'm going to hang with Sirius XM for a long time to come $$$$$$. And you can have pandora for your self.

  • Report this Comment On January 18, 2011, at 9:39 PM, brettkoller wrote:

    Wow. I find it more than a little disconcerting that these MF experts, individuals that we count on to have a somewhat unbiased opinion in relation to any one particular investment with their commentary based on facts not hyperboles, are so slanted when it comes to SIRI and this Pandora nonsense.

    Someone stated earlier that personal opinion, which is what I take this entire article to be garnered from, lowers the overall credibility of the entire site. I couldn't agree more and I am disappointed in them to say the least. If indeed these individuals have something to gain from a Pandora IPO then my year long hiatus from this site while I was on assignment may very well be extended indefinitely.

    Thank you to everyone for keeping it real in the face of some serious nonsense.

  • Report this Comment On January 18, 2011, at 10:49 PM, Blueshark151 wrote:

    Sirius has NO threat coming from Pandora. Just before Christmas at a party, I was discussing how Sirius SATRAD is but I was getting push back with all the talk about Pandora including from my wife. For Christmas, we drove from California to Florida and I brought my portable Sirius radio for the trip. Well, from Arizona to half of Texas we couldn't get a single signal including the Iphone which carried my wife's precious Pandora, but we got SATRAD the entire way! At one point we stopped for gas and coffee at a truck stop, only to see a trucker come in asking if they carried any Satellite Radios so he would have something to listen too. I will never forget that trip and I will never forget how Sirius was there all the way non-stop. The Sirius subscription is worth paying and I will be a member for life. Pandora, what a joke.

  • Report this Comment On January 19, 2011, at 4:11 AM, smluk9999 wrote:

    No joke. A friend of mine was streaming Pandora at work and got busted because it is using too much bandwidth 8 hours a day. I would rather pay $10-12 bucks a month 4 sirius than risk losing my job...... LOL !!!

  • Report this Comment On January 19, 2011, at 10:07 AM, David369 wrote:

    Good point on the Pandora subscribers itaintcool.

    I signed up for Pandora a couple of years ago and have never returned to the site. I guess I'm one of the subscribers. If I went back I wouldn't remember my password or user name and have since moved so I would re-register and then would be a double subcriber.

  • Report this Comment On January 19, 2011, at 10:26 AM, courtneTHEgreat wrote:

    One would think that BlockBuster would be the next 30-bagger, but who knows how BB management will direct this market.

    The ones to look at are LYNAS CORPORATION LTD SHS (LYSCF), RARE EARTH METALS INC COM (RAREF), MEDALLION RES LTD COM (MLLOF), and best yet AVALON RARE METALS INC COM (AVL).... All of these deal with rare-metal mining. All easy 30-baggers in 2-5 years!

  • Report this Comment On January 19, 2011, at 12:05 PM, benintexas wrote:

    I have been using Sirius since I got a vehicle with the Sat radio installed. It is better than my temp XM radio was since it had to transmit through my cars antennae. I live in the vast open spaces of Texas. Most of the uses for Pandora will not work except in metro areas where 3G and 4G exist. I would estimate 90+ % of the country would not stream Pandors as well as Sirius does in just about all locations. Just ask any IPad user. Not all of us live in the city - as a matter of fact the largest majority of Americans do not live in cities. Do not assume that the WiFi internet is available everywhere - it isn't.

  • Report this Comment On January 19, 2011, at 12:36 PM, ItAintCool wrote:

    Changing the headline from yesterday's neutral "These Stocks are 30 Baggers" to today's SIRI bashing "A 30 Bagger You May Want to Avoid". Nice work Jim Royal. If you and MF haven't shown your true agenda to bash SIRI before, it's pretty clear now.

    Why don't you change the headline to something truthful like "A 30 Bagger That I Told You Not To Buy For The Last Two Years".

  • Report this Comment On January 19, 2011, at 7:19 PM, baldheadeddork wrote:

    @multi007:

    "So the pandora concerns are, with "free" means "you cant complain about the quality". With "free" means you can be charged in the future. With "free" means you cant get high quality content. With "free" means pandora could become "advertising supported".

    Pandora through cellphone network. SIRI via Satalite. I wonder which one has better quality? My bet is on satelite."

    Let's not forget that Sirius is advertising supported, too. I think they still have some commercial-free music channels, but when I listened while having a rental last fall there were ads on their comedy channels.

    Satellite doesn't automatically equal better sound quality. Sirius doesn't divulge its bitrate, but listeners place it somewhere around FM broadcast for the music channels, and lower for the talk stations.

    You're right in thinking that satellites can stream more data than a cell tower (at least until 4G arrives). The problem for Sirius is on the other end of the satellite signal - the matchbook-sized antenna on the roof of your car. With an antenna that small and the transmitter at least 2600 miles away, there's only so much bandwidth you can take in. (It's also why you have that 1-2 second dead air period when you change channels on Sirius. The receiver is caching the signal of the new channel until it has enough of a buffer to play reliably.)

    Cell device antennas are smaller, but the transmitter is about 130 times nearer so the antenna size isn't a limiting factor.

    The bitrate on streaming audio is usually 128Kbps. This is a little better than FM but it's not CD quality. Listening to the two back to back, streaming sounds noticeably better. On the non-music channels, it's no contest. Comedy and talk channels on Sirius sound like AM broadcast radio. Stitcher podcast streaming is as good as FM.

  • Report this Comment On January 19, 2011, at 8:04 PM, baldheadeddork wrote:

    @ ItAin'tCool:

    So I knocked down your old ridiculous claim that it cost $7 an hour to listen to streaming audio, and now you pull up a price hike by Sprint as your new boogeyman. Now everyone will raise their rates?

    Not so fast. Sprint had underpriced its data plans before compared to Verizon and AT&T, and they still charge less even after the price increase. Everyone else would have to cut their prices to match Sprint after the increase.

    Try again.

  • Report this Comment On January 19, 2011, at 10:22 PM, ItAintCool wrote:

    Baldheadeddork. I have never made any claims that it costs $7 an hour to listen to streaming audio. I have seen you debate other people who have made similar claims. Still, if you don't believe me, I indulge you to investigate and find any comment where I made such a claim.

    And after you make the investigation and find I said nothing or the sort, perhaps you would like to retract your unfounded accusation?

    Despite your accusation, I do believe it will cost more to do streaming audio over a smart phone's data plan than it currently does to pay for 1 month of SIRI. I don't know if it will cost $7.00, or less, or more. But even if it came to be - lets say $1.00 an hour, that means you would be paying more for it than a month of SIRI with just 13 hours of listening time. And of course your programming through the streaming application would be much more limited in terms of choice compared to the variety programming available on SIRI, much of which is commercial free (unlike most "free" internet radio, like Pandora).

    I also believe that with the lack of net neutrality will eventually bring prices higher for Data plans. The wireless carriers will have to build a bigger infrastructure to support the large amount of data that will be taken up as people rely more and more on streaming content through the internet. The cost will have to be handed to either the content provider or the end user. So even if it's charged to the content provider, then the content provider will have to charge the end-user in the long run, otherwise they won't be able to stay in business. Either way, Free Internet Radio will not be free for much longer. So let the Fools tout how great Pandora is now, it won't be for long.

    Long on SIRI

    Short on MF

    And will be shorting Pandora after their I.P.O.

  • Report this Comment On January 20, 2011, at 6:43 PM, h53echo wrote:

    In reply to sirus about gold may I suggest GORO and AXU

    I am familiar with GORO having owned it at $5 and more at $18 and yesterday at $26. Jefferies just put its price target at $45 while I think it can go to $65 (maybe a dream). It pays a .03 monthly dividend and is just starting production of its silver and gold mines. Owners have a solid reputation in Denver and in the industry.

    AXU I know less about except it is a junior mining company and I own it at $5.75 after the recommendation of the person who recommended GORO.

    I am a retired VP with a national wirehouse so have a 20 plus year track record in the market, for whatever that means.

  • Report this Comment On January 21, 2011, at 3:34 PM, multi007 wrote:

    @ Itaintcool and @baldheadeddork

    Thanks both of you for giving me more factual information. This is what MF is lacking... Hey MF, Dont just tell me that Pandora is a Satrad killer and to run away from SIRI. TELL ME WHY like these kind folks did!

  • Report this Comment On January 21, 2011, at 5:13 PM, mithrandir8 wrote:

    I don't really know much about how well Sirius runs it's business but I would never PAY for RADIO. That's just ridiculous! I have my Sansa MP3 with 2500+ songs and plenty of free radio stations to choose from. For that reason I would never buy Sirius, I just don't believe in it. I'll stick with companies that sell services or products I actually use or believe in. NVDA for example, which so far has given me a 53% return.

  • Report this Comment On January 21, 2011, at 5:41 PM, kmacattack wrote:

    Your comments on SIRI vs. Pandora are totally biased, one sided information. Yes, Pandora is FREE, except you are limited to 40 hours per week, after that you pay. Sorry, all you long haul truckers, restaurants, offices, background music listeners at home, traveling salesmen, etc. Plus, Pandora has the added bonus of commercials about every third song. If you hit the "dont like this song" button about 5 times, they tell you that their royalty agreements won't let you do any more "don't likes" or "change stations." A lot of the songs they play are pure crap, supposed to be based on your personal tastes. I have a feeling they are songs and artists that they are able to play for a small or no royalty. And, with Pandora, you don't get sporting events like ALL the major league baseball games, ALL THE NFL games, Howard Stern, Martha Stewart, and about 120 other great channels.

    Touting Pandora is like saying "why pay for cable TV, HBO, Showtime, The Movie Channel, On demand movies, 200 other stations, etc. when you can put up an antenna and watch 5 local stations for FREE, with 25 minutes of obnoxious commercials per hour. BUT IT'S FREEeeeeeeee...

  • Report this Comment On January 21, 2011, at 5:53 PM, kmacattack wrote:

    I own 15,000 shares of SIRI at an average of $1.01 per share. This afternoon I sold a "Put" on all 15,000 @ $0.18, picking up another $2,700 in income on SIRI TODAY. If SIRI drops, I'll go ahead and buy another 15,000 shares, but it's not going to. I wrote a put about 60 days ago for $0.19 when the stock pulled back, and bought the put back for $0.02, and I'm going to continue to do this, while SIRI keeps trending upward. SIRI could squash Pandora if they wanted to by introducing their own "Sirius light" version with commercial sponsors, less stations, no Howard Stern, No NFL or Major legue baseball, etc. and make an absolute fortune on commercial revenues. Their are about 20 million more Sirius radios already installed that are not being used yet, the infrastructure is already in place and paid for (Satelllites etc.) It would require very little additional investment for SIRI to do this. They can do the same thing on the Internet by adding a "FREE" commercial sponsored Sirius network, again, at a very low cost. Pandora is in no position to launch Satellites and compete with SIRI in the GLOBAL Satellite radio business. You can't buy many satellites and pay for the rocket ride to launch them for "FREE".

  • Report this Comment On January 23, 2011, at 11:27 AM, MusiCali wrote:

    I'm a musician and I can't stand Pandora. They play bad songs that are supposed to go with the good songs you put int there.

    Sirius has intelligent people programming the stations.

    Long SIRI

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