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Why Sirius XM Holdings Inc. (NASDAQ:SIRI) Makes A Good Buy?

Sirius XM Holdings Inc. (NASDAQ:SIRI) expects to post free cash flow of almost $1.5 billion this year. So far, the company is using a big part of its funds in buy back process, but it won’t be surprising if in coming period, it uses a combination of cash and stock to close a big acquisition.

The highlights

Sirius has just closed one major acquisition since the merger between XM and Sirius in 2008. The company paid $530 million for Agero, providing it some cover in the auto-based telematics industry. There’s been quite of buzz surrounding Pandora Media Inc (NYSE:P) and Sirius to get together. However, a couple of weeks ago, The Wall Street Journal posted that Liberty Media Group (NASDAQ:LMCA) proposed to buy Pandora at $15 per share which was rejected by Pandora stating the offer as too low.

Pandora’s no longer a stock in focus considering its stagnancy in listenership and profitless state, but that’s easy for the firm that’s been able to register 30.6 million people to get premium satellite radio. In fact it is a transaction that makes more sense when evaluated on all aspects.

The key takeaways

The one main key takeaway from Sirius’ quarterly report was that it increased its guidance for all of its metrics. From free cash flow and generation of revenue to the year-end subscriber count, the company’s projection seems to get healthier with every quarter. The market witnessed a perfect example in 2015 when Sirius started the year by aiming 1.4 million net additions.

This reported figure was raised higher with every passing quarter, and by the year end, the company posted net additions of 2.3 million subscribers. And therefore it was not a surprise to find the stock making a new 10-year high after the announcement of quarterly results.

Published by Benjamin Roussey

Benjamin Roussey is from Sacramento, California. He has two master’s degrees and served four years in the U.S. Navy. His bachelor’s degree is from CSUS (1999) where he was on a baseball pitching scholarship. His second master’s degree is an MBA in Global Management from the University of Phoenix (2006). He has worked for small businesses, public agencies, and large corporations. He has lived in Korea and Saudi Arabia where he was an ESL instructor. Benjamin spends his time in between Northern California and Cabo San Lucas, Mexico, committing himself to his craft of freelance and website writing. http://www.facebook.com/ben.rouss

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