We recently compiled a list of the 10 Best Mid Cap Value Stocks To Invest In. In this article, we are going to take a look at where Sirius XM Holdings Inc. (NASDAQ:SIRI) stands against the other best mid cap value stocks to invest in.
Mid-Cap Stocks are Better in the Near Term
An easing cycle coupled with an upcoming election creates quite the environment for differing opinions to co-exist. On October 9, Jill Carey Hall, Bank of America Global Research head of U.S. small and mid-cap strategy and senior U.S. equity strategist, joined ‘Squawk Box’ on CNBC to discuss her bullish stance on mid-cap stocks, especially in the near term.
Hall stresses that small-cap stocks have been underperforming since the 50 basis point rate cut, going against historical expectations of small-caps performing well in such cases. She emphasized that investors are focused on stocks with stronger fundamentals and small-cap stocks are currently stuck in an earnings recession. We have yet to see a recovery season for small caps, the way we have been seeing it for slightly larger stocks, Carey adds.
READ ALSO: 10 Most Profitable Value Stocks To Invest In and 10 Most Promising Mid-Cap Stocks According to Hedge Funds.
Carey shares that mid-cap stocks are likely to be a “better hedge” in the near term, as they boast stronger fundamentals and have better earnings trends. Overall, she believes that mid-cap stocks have historically performed better than small-caps and are, therefore, a better area to target. She also emphasized that one rate cut is not going to solve the re-financing risk that small-caps, especially companies in real estate and tech, inherently come with.
She adds that investors must focus more on themes rather than specific sectors. However, with the current economic backdrop and a soft landing in sight, she advises investors to remain inclined towards stocks with positive revisions, higher quality, and stronger dividend yields, given that as the Fed continues to cut rates, money is expected to be driven more into equity income.
Carey also shares that the current economic environment has been weak but we may see acceleration after this quarter, keeping in mind that current GDP and jobs data have been “encouraging.” While she upholds an element of uncertainty, she remains focused on less risky and high-quality stocks. As investors look to the Fed as a catalyst for the market, high-quality stocks trading at discounted valuations are likely to reap greater benefits. That said, let’s take a look at the 10 best mid-cap value stocks to invest in.
Our Methodology
To come up with the 10 best mid-cap value stocks to invest in, we used the Finviz stock screener. We set the market capitalization filter to range between $2 billion and $10 billion and the Forward P/E filter to under 15. We then examined the hedge fund sentiment of these stocks as of Q2 2024 and picked the most popular ones. The stocks are sorted primarily in ascending order of the number of hedge fund holders as of Q2 2024 picked from our database and secondarily in order of their forward P/E and market capitalization.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Sirius XM Holdings Inc. (NASDAQ:SIRI)
Number of Hedge Fund Holders: 33
Market Capitalization as of October 28, 2024: $9.13 Billion
Forward P/E as of October 28, 2024: 9.75
Sirius XM Holdings Inc. (NASDAQ:SIRI) is a leading audio entertainment company in North America that owns SiriusXM, its flagship subscription entertainment business, and Pandora, a large podcast network with a suite of business and advertising solutions.
SiriusXM offers content across music, news, and sports to its audience of nearly 150 million monthly listeners and over 34 million subscribers. Pandora on the other hand has over 50 million active users. At the end of Q2 2024, Sirius XM Holdings Inc. (NASDAQ:SIRI) logged $2.18 billion in revenue and $316 million in net income. By the end of the quarter, SIRI had $343 million in free cash flow and $702 million in adjusted EBITDA. For the year ended 2023, the company generated $8.95 billion in revenue, of which SiriusXM accounted for 76% and Pandora made up 24%.
Following its recent split-off with Liberty Media Corporation, Sirius XM Holdings Inc. (NASDAQ:SIRI) is now an independent entity, and is rapidly growing. The restructuring allows the company to simplify its corporate structure and focus on providing audio entertainment services to people across North America.
At the close of Q2 2024, 33 hedge funds held stakes in the stock, contributing to its ranking as one of the best mid-cap value stocks to invest in. The company benefits immensely from its solid customer base. For the year ended 2023, 96% of revenue came from subscribers, a testament to its sustainable business model. Its largest shareholder, as of June 30, according to the Insider Monkey database, Berkshire Hathaway increased its position in the stock by 263% in Q2 2024.
Overall SIRI ranks 7th among the 10 best mid cap value stocks to invest in. While we acknowledge the potential of SIRI as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SIRI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
