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Sirius XM: Is it Ready to Go Global?

Do you think Sirius XM should expand internationally? And when? Take our poll to see what 'TheStreet' has to say.
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NEW YORK (TheStreet) -- In 2002, Craig Hodges' Hodges Fund made a significant purchase of XM stock at around $6, and it paid off.

"It was our largest position in the Hodges Fund at that time," Hodges said. "That really, really helped us in 2003 and 2004." The stock had taken off into the $30 range after sinking as a low as $2.50 in 2002. After selling off much of the stock at around $26, the Hodges Fund pretty much stayed out of it for a couple of years.

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Today, Hodges is increasingly interested in Sirius XM stock, buying about 10 million shares of it in the last five or six months and expecting a nice windfall again.

Hodges, like many other Sirius XM investors, considers the company's CEO, Mel Karmazin, to be a manager who can take the company to areas "where it needs to be." Despite the threats of new, competing technology, Hodges says "I feel that Sirius XM will be able to compete pretty well and is heading in the right direction."

Hodges, for one, say he would be disappointed if Sirius XM wasn't in the position to expand overseas two years from now. Still, he notes that the company would need significant market share in the U.S. before the company began moving in that direction.

Matthew Harrigan, an analyst at Wunderlich Securities -- who also believes that Sirius XM would have the capital to undertake an international launch within two to three years -- still thinks there's a fair possibility the company would stay in the U.S. to avoid the political risks abroad.

Another analyst, David Trainer, president of Nashville-based research firm New Constructs, doesn't think Sirius XM as a company and stock is going anywhere, but down.

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As far as Hodges is concerned, the stock could double, or even triple in a couple of years "if things continue to go well ... those kinds of rates of return are pretty good."

Furthermore, Hodges thinks that at this time next year, investors could see a 50% or 60% move in the stock "without a big stretch" if the company can continue with the positive cash flow and add new subscribers at the current pace.

"The nice thing about the business is the economies of scale," Hodges said. "They can add new subscribers without having to increase the costs at the same rates. The bottom lines should do pretty well, considering that car sales continue to do well."

In light of all this, we ask you: When do you think Sirius should expand internationally? Take our poll below to see what the

TheStreet

has to say -- and feel free to leave a comment if you have something to say yourself.

-- Reported by Andrea Tse in New York

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