NEW YORK (The Street) -- April's weak retail sales data that suggests consumers didn't spend as much money on goods as the market hoped didn't extend to U.S. car lots and automobile showrooms. General Motors (GM) forecast the seasonally adjusted annualized rate (SAAR) of U.S. auto sales reached 17.6 million vehicles in May -- the strongest sales pace in nine years.
And with the auto industry still poised to grow in 2015 at its fastest pace since 2005, this should fuel interest in car-related stocks like satellite radio provider Sirius XM Holdings (SIRI) and car-buying specialist TrueCar (TRUE) -- two stocks that have taken different turns. Take a look at the chart, starting with the merits of SIRI.
SIRI data by YCharts
Sirius XM, the only satellite radio provider in the U.S., has shown lasting power, withstanding threats from several streaming radio alternatives. After its shares traded flat in 2014, Sirius stock is off to a good start in 2015, gaining more than 11%, compared with 2% gains for the S&P 500 (SPX).
Headquartered in New York, Sirius needs auto sales to keep climbing, since it relies on car sales to grow its subscriber numbers.
In the first quarter, Sirius added 431,000 net new subscribers, up 61% from the prior year when it added 267,000. Self-pay subscribers, or those that are not on promotional trials, increased to 394,000, up from prior year's total of 173,000.
Just as important, self-pay monthly churn, the metric that tracks customer cancelations, continue to trend lower, down slightly to 1.8% from 1.9%.
And not only did Sirius grow revenue 8% year over year, while profits climbed 12%, Sirius maintained its reputation as a solid cash-generating business, posting a 24% year-over-year jump in cash flow. All told, with Sirius now boasting 27.4 million total subscribers and poised to add more with car sales on the rise, now is the time to want to own Sirius stock.
Unlike Sirius, Shares of TrueCar (TRUE) have gotten hammered so far in 2015, falling almost 40%. This is even though the Santa Monica, CA.-based company, which analyzes car-buying information, has grown revenue by an average of 46% year over year in the past four quarters. Not to mention that TrueCar has met or beaten consensus earnings targets during that span.
TrueCar's goal is to re-invent the way card dealers attract customers and sell their cars. The unique concept has attracted many new car shoppers, and in its first quarter, TrueCar reported a 34% year-over-year jump in user-purchased vehicles, reaching 168,559 units from TrueCar Certified Dealers.
And that TrueCar continues to raise its Franchise Dealer Count, up 26% year over year to 9,108, suggests its model is working. The more dealers sign up, the more money TrueCar is able to make by selling advertising space on its website.
Granted, TrueCar shares are not cheap at 33 times the 2016 average earnings estimate of 41 cents per share. Still, with the stock trading at near 52-week lows, investors looking for a potential bounce-back play can do well here, driven by higher auto sales.