Great Pick With Sirius! What's Next?

It's been more than a year now since Sirius Satellite Radio (NASDAQ:SIRI) and XM Satellite Radio (NASDAQ:XMSR) announced that they wanted to end their wearying war with a merger. Though government officials have been coming up with ideas that would make the merger more palatable to them (even if those ideas are half-baked), neither company seems any more assured that the deal will go through.

Meanwhile, both satellite radio providers continue to bleed on the bottom line -- though each is expected to generate more than $1.2 billion in revenue this year, both will likely remain unprofitable at least through 2009. Neither company's stock price has been particularly inspiring, either. Over the past year, shares of both have declined more than twice as far as the S&P.

On CAPS, there are 2,959 players bullish on Sirius, but 873 who think the stock will continue to underperform, earning it a two-star rating out of a possible five. Nobody on CAPS has read the stock better than former No. 1  player TMFEldrehad. Between May 2006 and July 2007, Eldrehad made six calls on Sirius -- five underperforms and one outperform. He was accurate five of those six times, earning 65 points for his calls on the stock.

Eldrehad is one of CAPS' All-Stars -- players with a rating of 80 or greater -- managing 80% accuracy on his picks while racking up 5,325 points. Sirius hasn't been his only great call. Here's a look at a few of his other prescient picks:

Data from CAPS.

So what is Eldrehad looking at these days? Here are a few of his most recent calls on CAPS:

Data from CAPS.

While not all of these picks may pan out, they could be a good place to start some further research. I decided to take a closer look at Pacific Ethanol.

Questioning the alternatives
You don't have to oppose alternative energy in general to question some of the alternative-energy stocks out there. As with any up-and-coming sector, in recent years the industry's valuations have often outrun the reasonable potential of some of its stocks.

But as opposed to solar or other alternative sources, ethanol has its critics; it's considered less environmentally friendly than other solutions, and it has the nasty side effect of inflating corn prices. High ethanol capacity has pushed down prices, while high corn prices have pushed up costs, leading to even tighter margins for producers like Pacific Ethanol.

Though Pacific Ethanol is valued at less than $200 million, on expected revenue of nearly $460 million for 2007, the company has been very thinly profitable -- when it's been profitable at all. It managed a meager 5% gross margin in its September quarter.

On CAPS, the stock has a one-star rating. Of the 202 CAPS All-Stars who've weighed in, 142 have called it an underperformer. One of these All-Stars, ScottyMax, recently shared his thoughts on why Pacific Ethanol has tough times ahead:

With prices of ethanol at pathetic 2.00/gal and corn prices at all-time high of 5.00/bushel things are looking ugly. The conversion rate is about 2.7 gallons of ethanol per bushel of corn. With all the ethanol plants expected to come online over the next year and yields already surpassing federal mandates in my opinion ethanol plants are doomed to fail... On bright side maybe the plants will start making cheap whiskey as they scramble for ways to survive.

So what's your take on Pacific Ethanol? Get in the action by clicking over to CAPS. CAPS is absolutely free, and it already has more than 86,000 stock pickers chipping in to find the best stocks out there.

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