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Sirius XM Stock Hits a 10-Year High

By Rick Munarriz – Nov 15, 2016 at 10:49AM

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The satellite radio monopoly hits its highest levels since the summer of 2006. Momentum continues to be positive after a strong quarterly report late last month.

Image source: Sirius XM Radio.

There's a fresh wave of bullishness when it comes to Sirius XM Radio (SIRI -3.16%). Shares of the satellite radio provider hit their highest levels in more than 10 years yesterday, and momentum is in its corner. Sirius XM stock has closed higher for seven consecutive trading days.

There hasn't been any substantial company-specific news since it reported quarterly results three weeks ago. Sirius XM CEO Jim Meyer was a presenter during Liberty Media's (FWONA) annual investor meeting last Thursday -- a big deal since Liberty Media owns a controlling 65.5% stake in the sat-rad giant -- but there wasn't anything that Meyer said that investors didn't already know.

Sirius XM is in a good place. It's still growing, gaining subscribers and getting them to pay more on average. Sirius XM remains profitable, with earnings and adjusted EBITDA typically growing even faster than revenue given the scalable nature of its business model. It even becomes an income play later this month when the first of its new quarterly dividends will go out to its shareholders. 

Speculators may be shaking their heads, but Sirius XM has become as close to being a steady blue chip as it has ever been. It's boring as an investment, but as yesterday's fresh 10-year high shows there's money to be made in between the yawns. 

It was still a pretty impressive quarter

Sirius XM closed out the third quarter with nearly 31 million subscribers. The year-over-year gain in accounts stands at 7%, but revenue is climbing slightly higher because folks are willing to pay more to enjoy coast-to-coast coverage of premium satellite-propelled radio entertainment. 

The new quarterly dividend may not seem like much at just $0.01 a share, but given Sirius XM's stock price in the mid-single digits it translates into a yield of 0.9% that wasn't there before. The new distribution policy doesn't mean that Sirius XM will stop buying back its shares. Sirius XM's board authorized another $2 billion in buybacks when the dividend was introduced.  

Sirius XM has now pieced together 28 consecutive profitable quarters, but there's still a wild streak to Sirius XM. It remains one of the market's most shorted stocks. The media giant has also suggested that it may be an acquirer, a far cry from when the company itself was being played up as a buyout candidate when Liberty Media was amassing its controlling stake in the business.

There's also the wildcard of video. Its latest contract with Howard Stern includes a video component that has yet to roll out. Sirius XM indicated during its earnings call late last month that video as a platform could launch as early as next year. If it's already holding up well with its premium audio service, one can only imagine what's possible as it tries to cross sell exclusive video content. 

Sirius XM may have had a sleepy climb to its highest stock price since the summer of 2006, but it's been more of a power nap. Slow and steady may be boring, but a quick peek at the stock chart shows that it can also be financially rewarding.

Rick Munarriz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.

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