Now that the time of year where a sound bite dictates how you handle your money is here, I thought I would choose some of my favorite stocks that warrant a buy, especially if people decide to sell off their positions. Trading is fun, and I fully support its use, but it is not the only path that should be taken. A person should work to be a great short-term and long-term thinker, which involves knowing when to use which. For the whole “sell in May” philosophy, use long-term thinking to exploit any opportunities.
Here are some quick and general guidelines for the companies I picked for this list. I have to like them, think they have long-term potential, and actually see them on a multi-year path. I will aim for a three year or greater outlook.
1. Almost turned around
Sprint Nextel Corporation (NYSE:S) actually has a multi-year turnaround plan that it is in the process of executing. The biggest component thus far seems to be the roll out of LTE across the country. Coupled with this are offerings like the iPhone and unlimited data plans aimed at taking subscribers from far larger competitors. Sprint Nextel Corporation (NYSE:S) is at $7, and just last year it was in the $2s. The company has a lot of interesting things going for it in the short-term. DISH Network Corp. (NASDAQ:DISH) made a bid for the company, but all this is very preliminary, and the company is a solid investment without it.
In the last quarter, the company had 1.5 million iPhone activations, with 43% of those new. The iPhone is still one of the most popular smartphones on the market, and having that many new subscriber activations in one quarter is impressive. Sprint Nextel Corporation (NYSE:S) is pretty aggressive, but it is coming from behind. Sprint is also focusing on prepaid plans a bit more, and I think it is testing the waters to minimize subsidies. I think phone subsidies and two year contracts are on their way out if the physical phones get any more expensive.
In the mean time, revenue growth is there, but could be slowing down. In the next few months, Sprint Nextel Corporation (NYSE:S) will add 171 cities to its existing 88 cities that have LTE, and perhaps it can more quickly expand its subscriber base.
2. Turnaround complete, growth awaits
Sirius XM Radio Inc (NASDAQ:SIRI) is a stock I recently got reacquainted with, and I like the long-term outlook for the company. There are so many opportunities open to it. Initially, the company was just a satellite radio provider to vehicles. With the proliferation of smartphones and similar devices, the company could deliver unique content through Wi-Fi. I think an on-demand model would be better, because people are not very tied to schedules when it comes to streaming. If Sirius XM Radio Inc (NASDAQ:SIRI) provides interesting content, it can make it available any time with subscription fees and possibly advertisements.
The most recent earnings had little that stuck out to me outside the numbers. I tend to hate numbers as everyone can extract the same result, and strategies and operation are far more interesting. The company focused a lot on its pre-owned car program, but I’m not really impressed. Anything like that will show up in the revenue, and I am fairly impressed with revenue growth. One interesting thing is that the company is doing a $2 billion buyback.
This was authorized at the end of 2012, but has not actually been done yet. It seems unlikely that this is being done only to return cash to controlling stakeholder Liberty Media. I think it makes more sense, considering Sirius XM Radio Inc (NASDAQ:SIRI)’ current trajectory, for Liberty to allow its controlling stake to increase as Sirius buys back other stock. Sirius has high cash flow, and more buybacks will eventually be initiated. Liberty can wait for those, unless Sirius XM Radio Inc (NASDAQ:SIRI) continues to improve.