Eyes On Sirius XM Holdings (SIRI): Highlighted Storm The Castle Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Sirius XM Holdings ( SIRI) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Sirius XM Holdings as such a stock due to the following factors:

  • SIRI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $149.9 million.
  • SIRI has traded 12.0 million shares today.
  • SIRI is trading at 1.52 times the normal volume for the stock at this time of day.
  • SIRI crossed above its 200-day simple moving average.

'Storm the Castle' stocks are worth watching because trading stocks that begin to experience a breakout can lead to potentially massive profits. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock is then free to find new buyers and momentum traders who can ultimately push the stock significantly higher. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize on. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on SIRI:

Sirius XM Holdings Inc. provides satellite radio services in the United States and Canada. SIRI has a PE ratio of 57.1. Currently there are 7 analysts that rate Sirius XM Holdings a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Sirius XM Holdings has been 47.9 million shares per day over the past 30 days. Sirius XM has a market cap of $19.4 billion and is part of the services sector and media industry. The stock has a beta of 1.64 and a short float of 11.1% with 6.87 days to cover. Shares are down 2.6% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Sirius XM Holdings as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.7%. Since the same quarter one year prior, revenues rose by 10.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Media industry and the overall market, SIRIUS XM HOLDINGS INC's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • Net operating cash flow has increased to $340.68 million or 24.74% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 13.60%.
  • The gross profit margin for SIRIUS XM HOLDINGS INC is rather high; currently it is at 62.02%. Regardless of SIRI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 11.58% trails the industry average.
  • SIRIUS XM HOLDINGS INC reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, SIRIUS XM HOLDINGS INC reported lower earnings of $0.06 versus $0.53 in the prior year. This year, the market expects an improvement in earnings ($0.08 versus $0.06).


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