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Too Dicey to Hold

By Richard Suttmeier | 02/21/06 - 08:13 AM EST
Stocks in Focus: XMSR, SIRI

After you receive this alert, I will remove XM Satellite Radio (XMSR:Nadaq) from the model portfolio. Shares closed at $21.57 Friday.

With this newsletter coming to an end next week, I will not be following XM on a daily basis but only in an occasional column on RealMoney.

XM reported disappointing earnings last Thursday, and Sirius Satellite Radio (SIRI:Nasdaq) did the same on Friday. But both stocks slumped on their reports.

I had indicated in my trading strategies that I would consider adding to the position in XM on weakness to its 200-week simple moving average at $20.80, but this morning XM has been downgraded to sell from hold, according to ValuEngine. If I sell this position near Friday's close at $21.57, the loss will be 18.3%. (Keep in mind that the model portfolio gained 42.8% on a previous holding in Sirius.) However, even before last week's earnings report, Sirius had been rated a sell, according to ValuEngine.

XM and Sirius must get serious about turning a profit, and stopping the star and price wars. The products are up and running with a full slate of diversified content, and both have ample automobile alliances and numerous consumer products sold at retailers such as Best Buy and Circuit City. In my judgment, there is room for both companies in the satellite radio space, but there are alternative ways to listen to music and talk in the car and at home. Satellite radio is no longer a hot topic and emerging technology.


Richard Suttmeier

Stay Tuned for Monthly Report

The final edition will be sent out Wednesday morning.

02/28/06 - 12:39 PM EST
Making Adjustments
Stocks in Focus: CSCO, EMC, INTC, TWX

Booking profits in one position and trimming three others.

02/24/06 - 11:07 AM EST
Removing a Hedge
Stocks in Focus: SMH

Suttmeier's closing this protective position, which is no longer necessary.

02/23/06 - 10:11 AM EST
Technology Report Weekly Roundup

The market's resilience continues as almost all sectors remain overvalued.

02/24/06 - 06:17 PM EST

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