In 2024, nine high-profile companies have announced stock splits, with most being forward splits aimed at making share prices more affordable. However, one company is standing out as historically cheap despite its upcoming reverse split. This company is Sirius XM Holdings, which is set to merge with Liberty Sirius XM Group to create a new public company with a single class of shares. This merger will result in a 1-for-10 reverse split, boosting the share price and potentially attracting new institutional investors.
Sirius XM Holdings, the only licensed satellite radio operator, has unique advantages such as strong subscription pricing power and a predictable cost structure that results in consistent operating cash flow. With less reliance on advertising revenue compared to traditional radio operators, Sirius XM is better positioned to weather economic downturns. Furthermore, the company’s valuation is attractive, trading at a discount to its earnings and cash flow multiples over the past five years. Additionally, Sirius XM pays out dividends, with a yield of nearly 4%.
Despite the negative connotations typically associated with reverse splits, Sirius XM Holdings stands out as a strong investment opportunity with clear competitive advantages and a historically cheap valuation. With these factors in mind, the company has attracted the attention of investors, including journalist Sean Williams, who has more than quadrupled his stake in Sirius XM over the past two months. While other high-profile companies with forward splits have been getting attention on Wall Street, Sirius XM’s unique position in the market and attractive valuation make it a compelling investment opportunity for investors looking for growth and stability.
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https://www.fool.com/investing/2024/06/27/meet-the-stock-split-stock-quadrupled-my-stake-in/