This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Sirius XM Stock Could Quadruple, Hodges Says

BOSTON (TheStreet) -- Sirius XM (SIRI) shares may quadruple to as much as $8 in the next three years as the satellite-radio company adds subscribers without many new costs, says Craig Hodges of the Dallas-based Hodges Fund (HDPMX).

Hodges says Sirius, which reports second-quarter financial results Tuesday, could follow a similar trajectory as footwear maker Crocs (CROX) and clothing and accessories company Fossil (FOSL), which attract a similar rabid fan base of investors. Crocs shares are up more than 840% since the financial crisis took hold in late 2008, and Fossil shares have rallied 400% over that same time.

Sirius XM, which trades at $2.11, headed toward zero two years ago, pummeled by net losses and bankruptcy fears. But the company has continued to add subscribers, helped by a rise in new-car sales.

"As a $2 stock, it could be worth $6 or $8 in a few years. It could be that type of a winner," Hodges says of Sirius XM. "I would say that it's a two- or three-year stock, though, if I were a buyer today."

Hodges' bold prediction would make Sirius XM's hefty retail-investor base very happy if it were to come true, and Hodges says with a laugh that he understands the fervor his comments could generate. But as an owner of Crocs since $1 (it now trades for $31) and Fossil since $3 (the stock now trades above $125), Hodges knows how patience can pay off.

Sirius XM is a holding in the $307 million Hodges Fund, a multi-cap core equity mutual fund created in 1992, and the $9 million Hodges Pure Contrarian Fund (HDPCX), opened in 2009 to invest in beaten-down stocks. As of June 30, Sirius XM represented a 3.1% weighting in the former and 3.5% in the latter.

As part of the Hodges Fund, Sirius XM counts Wal-Mart (WMT), Cummins (CMI), Southwest Airlines (LUV) and Halliburton (HAL) among its peers.

Hodges' funds have reduced their positions in Sirius XM, which seems to contradict his outlook on the company. The funds now own about 5 million shares, down from 12 million shares previously. Hodges says the selling was only profit taking as the funds had costs as low as 56 cents, and he notes that Sirius XM remains a significant position in each of the two funds.

Not all Sirius XM watchers share Hodges' rosy view. Analysts following the stock have an average 12-month price target of $2.24, according to Bloomberg. The most optimistic view from Wall Street analysts tops out at $2.50, well below Hodges' long-term target. Hodges, though, says Sirius XM has developed into a powerhouse at turning subscribers into profit.

"If everything goes right for these guys and they add subscribers and convert those who try it, you could have real money fall to the bottom line," Hodges says of Sirius XM.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

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.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,106.70 +29.83 0.17%
S&P 500 2,000.02 +2.10 0.11%
NASDAQ 4,570.6370 +13.29 0.29%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs