Sirius XM Radio Inc (SIRI) is Getting Serious About Its Stock

Conclusion

Because of Sirius’s ownership structure, its buyback program has a much greater impact since it represents about 44% of its available float. Although the program has already started, it seems that most of its stock has not yet been bought back, so that most of the purchase will be done over the coming year. That means that there will be a guaranteed demand for a very large percentage of its available float.

CBS’s P/E ratio of 18.4 may signal that it has peaked, considering the steady and uninterrupted rise in its stock price since early 2009. It doesn’t have any particular claims to be an especially attractive value, either in terms of innovation or other considerations, such as insider buying or buyback scheme.

Netflix, Inc. (NASDAQ:NFLX) is the quintessential growth stock. Its fundamentals, as evidenced by its revenue growth and profit margins, don’t justify its present valuation. Its P/E of 532 reflects that reality. Its attraction resides in being a pioneer in the provision of entertainment via the internet. Perceptions of the company ride on whether or not it will be able to capitalize on the opportunity.

Sirius seems to be a safer bet, especially in the short run. Such a guaranteed large purchase of available stock gives investors at minimum a floor, and more likely a significant upside, as the out-sized demand will tend to push up its price.

Mike Thiessen has no position in any stocks mentioned. The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix. Mike is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Sirius is Getting Serious About Its Stock originally appeared on Fool.com is written by Mike Thiessen.

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