By Jason Bond of Jason Bond Picks
NEW YORK ( TheStreet) -- Sirius XM (SIRI) stock enthusiasts could be in for a continuation of the bull market in this incredible turnaround story. By the close of 2014 first quarter, I expect SIRI to briefly touch $4.60, a nearly 27% rise in price from Wednesday's close of $3.63.
The rise will be driven by its good fundamentals. Also, a "no change" of the near-zero interest rate monetary policy from the Federal Reserve should provide an additional liquidity lift to the overall equities market, including the highly visible, volume-leading and outperforming stocks.
Strong Fundamentals, a Remarkable Turnaround StoryAt a low of 5.2 cents per share in February 2009, the company was all but left for dead, but a $530 million capital injection from behemoth Liberty Media during February 2009 saved Sirius from the clutches of receivership.
Under terms of the agreement, Liberty provided Sirius a $280 million 15% senior secured note during phase one, another $150 million during phase two, and up to $100 million during phase three, for a total of $530 million. From the $530 million proceeds, Sirius retired $172 million of maturing 2.5% convertible notes and paid down $100 million of loans outstanding under terms of its revolving credit facility. The remaining cash of $258 million was used for general corporate purposes.In return, Liberty received 12.5 million shares of preferred stock convertible to 40% of Sirius' common outstanding. In addition, Liberty occupy two seats on Sirius' board of directors. Today Sirius has achieved success from the dark days of 2009. Record revenue of $962 million, adjusted EBITDA margin of 30.7% for the 2013 third quarter, and an increase to free cash flow of 26%, are remarkable achievements for a company once trading for a nickel more than three years ago. It gets better. Sirius may achieve a 34.5% adjusted EBITDA margin for the fourth quarter, according to Sirius XM's third-quarter conference call of October 24. Subscribers are expected to grow by 1.5 million (guidance of 1.6 million by year-end). New-car sales penetration should reach 69% -- including Honda, which expects to introduce SXM 2.0 platform as part of its new contract with Sirius XM. That contract expires in 2020 and will add "20 points" to the penetration rate with Honda (4.1 million vehicles yearly output), according to Sirius XM CEO Jim Meyer.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV