Shares are about flat so far this year, compared with gains of 10.8% for the Dow Jones Industrial Average and 13% for the Standard & Poor's 500 Index, and so Sirius shareholders may be desperate for some good news heading into 2015. By accounts, that news has arrived.
Helped by the plunge in oil prices, consumers are buying more cars. And they're driving longer distances, too, which may mean they're listening to Sirius more during trial periods, when customers get Sirius for free after buying a new car. And so Sirius -- which has agreements to install its radios in vehicles from such major automakers as Ford (F) - Get Report and Toyota (TM) - Get Report -- is likely to benefit. According to J.D. Power, new-vehicle sales for December are expected to reach their highest levels in eight years.
To the extent Sirius can capitalize on higher vehicle sales remains to be seen. The company's radios are installed in about 26% of the vehicles on the road, which suggests there's room for growth. But it won't be easy.
The arrival of Apple's (AAPL) - Get Report CarPlay, which has been integrated with cars from such companies as Ferrari, Mercedes-Benz and and Volvo, has given consumers and auto manufactures another alternative to Sirius, as has a competing free service from Pandora (P) , which has seen greater adoption in cars.
Meanwhile, Sirius' revenue, Ebitda (earnings before interest, taxes, depreciation and amortization) and average revenue per user, or ARPU, have been increasing, all of which bodes well for the company's stock, which was trading at $3.48, down 1 cent, on Tuesday.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
TheStreet Ratings team rates SIRIUS XM HOLDINGS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate SIRIUS XM HOLDINGS INC (SIRI) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, increase in net income, growth in earnings per share and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
You can view the full analysis from the report here: SIRI Ratings Report
At the time of publication, the author was long Apple.