With earnings now known to be just a week away, it's time to put SiriusXM (SIRI) in the spotlight again.
Shares of SIRI have set a new 52 week high this week in anticipation of first quarter earnings, touching the $1.96 mark on Monday, which puts the stock well on its way to previous price projections of two dollars. With revenue and subscriptions on a sharp rise during the fourth quarter of 2010, SiriusXM not only marked itself as a company on the solid decline, but also as a pretty good long term pick once again.
With that in mind, SIRI is still just as much a trader's play as it is a long term investor's play.
The recent pattern for this stock has been to see pre-earnings runups followed by quick, although somewhat modest, declines after the numbers are released.
Following the fourth quarter announcement in February, shares fell to $1.68 for a short time before recovering to the current levels. This action, as it becomes predictable, makes SIRI a winner for all.
Traders, for instance, were able to realize gains by selling before the earnings report was released, and long-termers were able to add shares below the $1.70 mark, and both tactics are looking pretty good right about now as the SIRI share price inches up toward the two dollar mark.
It's highly expected that the trend of increased subscriptions and revenue will have continued during the first quarter, just fueling SiriusXM's prospects for longer term growth, and investors may also see more proof that the company is concentrating more resources to paying down debt before it becomes due.
Although the debt repayment may put a damper on the total numbers, it's definitely a positive step in terms of placing the company on a more firm foundation for the future.
There's been little heard from anyone about the Howard Stern lawsuit that was filed last quarter, so that's a subject that may come up during the conference call that is scheduled for 8:00 am ET on Tuesday, May 3. Expect the numbers to be on the street before that time.
Each quarter SIRI looks to be setting higher highs as the full effect of the rebound from the brink of bankruptcy unfolds, but even while all the news looks encouraging at this point, it's still prudent to entertain the potential negatives.
The global geopolitical unrest, compounded by the effects of natural disasters that seem to be popping up on a regular basis, all weigh a certain amount of risk on the world economy as oil prices continue to rise.
Talk of six dollar per gallon gas in the United States is an indication that if the current trend continues, the budget for 'luxury expenses' of the US consumer could significantly shrink. When that happens, consumer spending on services such as satellite radio will be the first to go.
That's why in my opinion, even though this company is looking solid again for the long term, the traders may have the safer play - realized gains are a lot more valuable than paper gains that can disappear on one sign of bad news.
That said, I'll be watching to see if the trend with SIRI continues, and we get a post-earnings slide.
All eyes are on May 3rd for Sirius investors.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
