Should I Do It? Sirius

But even companies with the poorest fundamentals and competitive positioning can be a buy when a stock is cheap enough. But Sirius is far from cheap. Because the company is nowhere near reporting anything resembling a profit, sales-based ratios must be used. Sirius is trading at nearly 10 times 2006 sales, which is an outsized number suited to profitable companies with strong profit margins. In other words, the stock is trading at an expensive multiple, especially given that Sirius has no earnings. And the company has zero chance of reporting a profit this year.

So should Sirius be bought? I actually believe Sirius can rally in a strong market should stocks extend their recent rally, but as a long-term investment, I have to give Sirius the thumbs down.

Generally speaking, the latest names added to Breakout Stocks have been reasonably-priced stocks with strong financial positions and unique product and/or service offerings. In addition, for the Breakout Stocks model portfolio, I am emphasizing stocks with some type of secular growth component that can withstand a moderate economic slowdown. So while Sirius can bounce from here, it simply doesn't fit the requirements of what I am seeking in new positions.