Despite a booming market, numerous undervalued stocks are still available. Sirius XM Holdings and Carnival Corp. are two examples of such stocks, both currently trading in the $20s range, offering potentially lucrative investment opportunities.
Sirius XM Holdings (SIRI) has recently seen investment interest from Warren Buffett, who increased his significant stake in the company, with Berkshire Hathaway now owning nearly a third of its outstanding shares. As the sole provider of satellite radio services in the country, Sirius XM has faced challenges, including a decline in subscriber numbers and a downturn in organic revenue growth. This decline is partly due to consumers opting to stream audio through their phones and reduced driving post-pandemic. Additionally, a reverse stock split and tracking share consolidation have negatively impacted shareholder sentiment, halving the stock’s value this year despite a slight uptick following Buffett’s investment.
Currently, Sirius XM’s strategic position is improving. With companies calling employees back to the office, reduced gas prices, and potential interest rate cuts by the Federal Reserve making new car purchases with built-in satellite radios more accessible, the company’s fundamentals are strengthening. The stock is now trading at less than 10 times its earnings, with a high dividend yield of 3.9%, expected to be even more attractive as interest rates decline. Analysts anticipate a return to revenue and profit growth next year, making this media stock an attractive buy due to its strong cash flow and earnings.
Carnival Corp. has experienced a positive resurgence in market interest, with its shares increasing by 55% over the past two months and 166% since the start of last year. Despite these gains, the stock remains undervalued. Carnival has reported record-high customer deposits for future sailings, a strong indicator for upcoming quarters. Revenue and adjusted earnings per share saw increases of 15% and 62%, respectively, in its recent quarterly report.
Currently, Carnival trades at 16 times its projected earnings for the fiscal year ending soon and less than 13 times the analyst profit targets for fiscal 2025. Having successfully surpassed analyst estimates for more than two years, Carnival continues to deliver substantial earnings surprises. The company is also tackling its debt load, paying down $7.3 billion since last year, taking advantage of its renewed profitability after an operational lull during the pandemic suspension of sailings. If the economy remains stable, the outlook for the cruise industry remains promising.
Both Sirius XM and Carnival Corp. present potential investment opportunities for those seeking value in the current market landscape.
