With shares of Sirius XM Radio (NASDAQ:SIRI) trading around $3.05, is SIRI an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock’s Movement
Sirius XM Radio is in an industry that is showing strong signs of growth. A few years back, the digital music was disliked due to the fact that it was chipping away at sales of the industry. Today, digital music is going full speed ahead and is being backed by big companies since a way to monetize it has been found. SIRI has suffered but it looks to be picking-up steam as it continues to innovate and expand to different platforms.
T = Technicals on the Stock Chart are Strong
Taking a look at SIRI’s stock price chart, it has come off the lows and onto a beautiful uptrend consisting of higher highs and higher lows. Currently, the stock is trading at 5-year highs. It is consolidating after gaining over 6% from last year’s close. Look for this SIRI to coast higher once the digestion is completed.
In a strong uptrend, a stock should be trading above its key moving averages. SIRI is above its 50-day, 100-day, and 200-day simple moving averages and is consolidating around its 20-day. These moving averages are also upward sloping an in consecutive order, giving the trend more validity.
As far as the options markets go, the implied volatility of SIRI options is at average levels, signaling no potential excessive premium bidding. However, there looks to be significant accumulation in the January 2014 2, 2.5, and 3 strike calls. These three contracts make up most of SIRI’s open interest which may be a bullish sign…