You Must Be Sirius-Ly Dell-Usional

by: Mike Stallings

Two stocks currently strike me these days as having an upside that many folks just seem to have not recognized yet. One, Sirius (NASDAQ:SIRI) has been on a roller coaster ride and lately is headed downward. I wrote articles on this showing how to make money as we hold on for dear life, waiting for Liberty (LMCA) to make us all rich by buying back the shares or taking the company. It has not happened, and the stock is down more than 20% in the last 3 months.

SIRIUS XM Radio Inc. (<a href='' title='Sirius XM Holdings Inc.'>SIRI</a>)
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The other stock that I believe has some huge upsides is Dell (DELL). I know with the tablet craze out there (I own an iPad 2 myself) and everyone owning a smartphone these days, the prospects may seem very dim for a company whose main focus is on desktops and laptops.

Dell Inc. (<a href='' title='Dell Inc.'>DELL</a>)
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Both of these stocks have a few things in common which frankly you cannot ignore:

Price Targets: Both of these stocks have expert price targets that are significantly higher than their current share price. Sirius is in the $1.80 range, while Dell sits in the $12 range. In fact Sirius is covered by 14 brokers with a low target of $2 and a high over $3. The mean is over $2.50. Should the stock hit the mean in the next 12 months, you are looking at a 40%+ ROI. Dell has a mean target of $16, with coverage by 30 analysts. Going from $12 to $16 is a 25% ROI, not chump change! The Dell side of this was also covered by Skyler, who beat me to the punch a bit in this article.

Fundemantals: Although none of us know for sure how the Liberty/Sirius potential merger/takeover will end up, the fact is the fundamentals of Sirius do remain bright. Whether you end up with Liberty shares of not, the company is not going to be changed. It is creating more FCF each and every quarter, adding new subs and hopefully (with some new fresh insight and strategies) can and will realize it is 2012 and focus not just on cars (even though I like their penetration into the used car market) and get after other sources. For Dell, (again props for Skyler for beating me to the punch a bit on this), both their trailing and forward P/E is in the 6's, they recently announced a .32 dividend and also are not just focusing on the laptop/desktop market. They also focus on hardware (printers, monitors, and yes tablets) and server and solutions for large corporations as well as the average Joe. Dell also provides gaming desktops and laptops with its "Alienware" line. There is a huge market for online game players and that is something you frankly need a laptop or desktop to accomplish.

The fact remains that both companies are grossly underpriced and have the potential in both short and long term to return a nice profit to the investor that can spot this. At the end of the day (as I have stated before) it is your money and make your decision wisely.

Disclosure: I am long SIRI, DELL.