What is considered a good return on your investment? 10% per year? 20%? Most would say between those two values will set you up for early retirement and perhaps even place you among the top 1% of wealthy people in the United States.
As investors we are always looking for ideas which will help us meet our goals. The following three picks are my personal picks for between 10% and 20% gains in the next 6 months (and even more year over year).
SiriusXM is the only provider of subscription based Satellite Radio service in the United States. With over 20 million subscribers, a profitable balance sheet, and exceptional prospects for the full year 2012, SiriusXM is poised to appreciate well beyond its current share price of $2.25.
A large driver of subscribers (no pun intended here) is auto sales, and they are shaping up for an exceptional year, with SAAR approaching 15.1 Million. With inroads into used automobiles as well, along with additional retail exposure with the Lynx and Edge radios, SiriusXM can be expected to add considerable numbers to their subscriber base. This should increase other numbers in a positive direction across the board, compounded with the modest and so far well received price increase this year.
Liberty Media (LMCA)
Any mention of SiriusXM in the bullish sense should be paired with Liberty. Liberty owns a 40% stake in SiriusXM as of this writing, and can at any time increase their position up to 100% ownership. Since SiriusXM makes up over 50% of Liberty's market cap, what is good for SiriusXM is good for Liberty.
Liberty also owns interests in a host of other companies including Barnes and Noble (BKS) and Live Nation (LYV). Liberty offers a perfect play for anyone seeking exposure to SiriusXM indirectly, and gives the added benefit of hedging with interest in the other companies in their portfolio.
With auto sales shaping up to be outstanding this year, who better to benefit than the auto makers themselves? With 14% increases in sales from February 2011 to February 2012, and projections of up to a 15 Million SAAR, the future looks very bright for Ford. Arguably you could choose almost any auto maker for gains, but I've chosen Ford here simply based upon my personal experiences with Ford vehicles (one of my vehicles is currently a Ford), and my opinion of their quality product.
Keep an eye on auto sales rates throughout the year on a month to month basis, and purchase Ford sooner rather than later in order to maximize gains. As the year unfolds, and higher numbers are reported, I expect Ford to increase in value organically.
If you make the right decisions for your investments and adjust your portfolio from time to time, you can significantly outperform the indexes. Do your due diligence, research your companies, and be sure to invest with conviction. This list of three quality companies should give you a great starting point for a 10% to 20% gain over the next 6 months of 2012.
Disclosure: I am long SIRI.
Additional disclosure: I am long SIRI June $2 calls.