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Is Sirius XM Stock Too Boring to Hate in 2020?

By Rick Munarriz - Updated Jan 22, 2020 at 4:41PM

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Trading volume and short interest are at their lowest levels in months, but that doesn't mean Sirius XM is dead as a market-thumping stock.

There was a time when Sirius XM Holdings (SIRI 1.14%) was a hotly contested battleground stock, but these days there seems to be an unspoken truce between the bulls and the bears. Sirius XM's slowing organic revenue gains have scared away high-octane growth investors. while the stock has consistently traded above $5 since the springtime of 2017, sending penny stock speculators elsewhere. 

The worrywarts have also moved on. There were a little more than 185 million shares sold short at the end of last month, Sirius XM's lowest short interest in six months. With Sirius XM steady, profitable, and working on an impressive 11-year streak of positive returns, the satellite-radio provider doesn't appear ready for a massive drop.

So it's boring for the bulls and equally boring for the bears. But that doesn't mean it should be dull for you.

The cast of Better Call Saul at a Sirius XM Town Hall session.

Image source: Sirius XM Holdings.

Around the dial

Sirius XM doesn't have the same bundle of concerns it did a decade ago, when regulators took too long to approve the combination of Sirius and XM, leading the company to consider bankruptcy shortly after the merger's completion. Its business is now growing at a predictable pace, and the stock is trading for less than 30 times this new year's projected earnings and just 23 times next year's target. 

Closing on the Pandora acquisition early last year opened new growth catalysts for the parent, and that will be especially true if Sirius XM successfully makes a bigger push into premium streaming. Still, things are still far from perfect. Satellite radio might not be as popular in the future as it is right now, and new auto sales, the lifeblood of new subscriptions, are expected to decline again in 2020. 

However, with churn holding steady and a strong grasp on cost controls, it's hard to bet against the satellite-radio monopoly. It's been aggressively buying back shares over the years -- a smart move, with the stock climbing higher every passing year for more than a decade.

The winning streak will inevitably end, of course. An economic recession would do the trick. In fact, it's probably not a coincidence that this 11-year run started following a recessionary hit. Moreover, Sirius XM has survived the connected car, but technology can always evolve with Sirius XM on the outside looking in. However, given that it's still finding ways to grow in this wide-open climate, the smart money has to be on seeing the stock extend its streak to 12 years of positive gains. 

Armed with 34.6 million total subscribers -- and growing, slowly -- Sirius XM has earned the truce between the bulls and bears. It's not sexy enough for extreme growth investors and not volatile enough for short sellers. It's right where it needs to be, and there's nothing wrong with boring as long as you're winning. 

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