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JimVanMeerten (58.30)

Should you be serious about Sirius?



May 10, 2011 – Comments (2) | RELATED TICKERS: SIRI

Normally I do not like to follow penny stocks (stocks under $5).  They are hard to get financial information on and aren't followed by the brokerage firms.  There are bottom feeding vultures that like to short penny stocks then bombard the Internet with negative info so the stock tanks then they close their positions before the issue recovers. Sirius XM Radio (SIRI) is an exception. It came up on my Barchartscreener when I was looking for stocks trading over 100K shares and hitting frequent new highs.  The momentum and sales and earnings projection are worth watching.

Sirius Satellite Radio (SIRI) is building a digital satellite radio system that will broadcast up to 100 channels of music and entertainment programming to motorists throughout the continental United States. The company plans to offer channels of commercial-free music and channels of news, sports and entertainment programming for a monthly subscription fee. Sirius Satellite Radio has an exclusive agreement with Ford Motor Company to install Sirius receivers in Ford vehicles.  The company has an advantage of being an offering in new vehicles and sells not only the services but the equipment as well.

Factors to Consider:

Technical Factors:

1 - 96% Barchart technical buy signal

2 - Trend Spotter buy signal

3 - Above its 20, 50 and 100 day moving averages

4 - 15 new highs and up 25.57% in the last month

5 - Relative Strength Index is 72.39% and climbing

6 - Trades around 2.21 with a 50 day moving average of 1.84

Fundamental Factors:

1 - Although this is a penny stock (under $5) it is followed by 10 Wall Street brokerages

2 - Brokerage analysts have released 4 strong buy, 4 buy and 4 hold recommendations for aggressive investors

3 - Sales are expected to increase by 8.10% this year and 10.60% next year

4 - Earnings projections are very aggressive with estimates of an increase of 200.00% this year, 66.70% next year and over 30.00% annually for the next 5 years.

5 - Many of these projection are tied to the increase in new car sales that have this radio as a standard offering

General Investor Sentiment:

1 - One of the most widely followed penny stocks on Motley Fool with 5,856 readers giving an opinion

2 - CAPS members vote 4,161 to 960 that the stock will beat the market

3 - The more experienced All Stars vote 533 to 202 for the same result

Summary:  Even though this is a widely followed and positively rated stock by both the professional and individual investor it is a penny stock with over 270 million shares shorted which equates to about 5 1/2 days volume.  This is a stock for only the most aggressive and seasoned investor or better yet speculator and should only be purchased with a stop loss in place.  In adding it to my Barchart Van Meerten Speculative portfolio.

Jim Van Meerten is an analyst for  Marketocracy Capital Management.  He shares his knowledge and experience from over 40 years of investing in stocks, mutual funds and ETFs on  in his daily blog -- Barchart Portfolio Blogs.

2 Comments – Post Your Own

#1) On May 10, 2011 at 12:03 PM, ikkyu2 (98.57) wrote:

Did you really not bother to point out that total debt to equity is more than 10?  Was that deemed impertinent?

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#2) On May 10, 2011 at 3:52 PM, bottomfisherman (36.22) wrote:

Popping today, shorts must be trying to cover their butts to avoid getting futher crushed.

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