Don’t let a rising market stop you from finding market bargains. There are still a lot of cheap stocks out there it seems. I want to talk about a couple of them, and it doesn’t take much to get started in either position as both stocks are currently trading at the $20 level.
Sirius XM Holdings (NASDAQ:SIRI) and Carnival Company (NYSE: CCL) (NYSE: MARKET) Absurdly cheap at the moment. Even a $500 investment can go a long way now if investors pay attention to the value of stocks. Let’s take a closer look.
1. Sirius XM
Warren Buffett poised for one of the year’s biggest losers last week, adding to his already large stake in Sirius XM. Berkshire Hathaway It now owns nearly a third of its outstanding shares.
The only game in town When it comes to satellite radio in this country, Sirius XM has fallen on hard times. The subscriber base may have peaked last year, after consecutive quarters of serial declines. Organic revenue growth has been hovering in the single digits over the past decade, but is now negative.
There are some good reasons why new car buyers shouldn’t pay for satellite radio. Most cars make it easy to stream audio apps they already access on their phone through the car’s speakers. People aren’t driving much at this end of the pandemic. There are also some sound reasons why the same stock might be out of favor after executing a reverse stock split after consolidating its tracking shares. Sirius XM has felt the pinch, and so have its shareholders. Although it rose this month on Buy Buffett sharesSirius XM shares were cut in half this year.
Sirius XM is no longer half the company it used to be. The reverse split is now fading in the rearview mirror. There is also no longer shareholder confusion about keeping track of stocks that are trading at a significant discount to common stock. Essentially, Sirius XM is also in the driver’s seat. Companies are calling people back to their offices. Gas prices are now near their lowest levels in three years. The Federal Reserve’s rate-cutting mandate is supposed to make it easier for new car owners to get behind the wheel for a ride with a factory-installed satellite radio.
The stock is also now historically cheap. Sirius XM trades at less than 10 times earnings. A higher dividend yield of 3.9% will look even better as interest rates continue to fall. Analysts also see a return to overall and bottom-line growth next year. It’s time to switch to driving here in this surprisingly cheap car Media stock This generates a lot of free cash flow and profits even during this difficult period.
2. Carnival
Unlike Sirius XM, Carnival is an industry that has returned to the fantasy world of the market. Shares are up 55% since bottoming out two months ago, up 166% since the beginning of last year. That’s not to say the world’s largest cruise line operator isn’t cheap.
Carnival is stronger now than it was before the pandemic. Customer deposits for future cruises have never been stronger than at this point in the year. Revenue and adjusted earnings per share rose 15% and 62%, respectively, in the latest quarter. Customer deposits are at another high for this time of year, which is a good sign that the next few quarters will be strong as well.
Carnival is trading at just 16 times what it expects to earn for the fiscal year that ends next month. Trading at less than 13 times analysts’ fiscal 2025 earnings targets, Wall Street pros have been caught on the short end for some time. Carnival has topped analyst estimates for more than two years, hitting double digits in each of the last five reports.
Debt has been an issue for the industry, as it had to finance an operational lull for more than a year after the pandemic led to the suspension of cruises. She uses her newfound profitability to tackle those demons. Carnival has paid off $7.3 billion of its debt since the beginning of last year. If the economy is able to achieve a soft landing, the waters should be quite attractive to cruise lines.
Should you invest $1,000 in Sirius XM now?
Before you buy shares in Sirius XM, consider the following:
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Rick Munariz He has positions at Carnival Corp. and Sirius XM. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends Carnival Corp. At The Motley Fool Disclosure policy.
Do you have $500? 2 ridiculously cheap stocks that long-term investors should buy now Originally published by The Motley Fool