We recently compiled a list of the 8 Best Warren Buffett Stocks to Buy According to Analysts. In this article, we are going to take a look at where Sirius XM Holdings Inc. (NASDAQ:SIRI) stands against the other Best Warren Buffett Stocks to Buy.
2024 will go down in history as the year that legendary investor Warren Buffett started showing signs of slowing down after an illustrious career in the investment world. After losing his best friend and longtime partner, Charlie Munger, the Oracle of Omaha increasingly shows signs of relinquishing control of his investment empire.
Even with his investment company becoming the first non-tech giant to hit the $1 trillion mark on market cap, Buffett is slowly relinquishing control after years of tremendous success. Handpicked Greg Abel is now responsible for taking over the Buffett Empire after more than 60 years in the limelight.
READ ALSO: Carl Icahn Stock Portfolio: 7 Best Stocks to Buy and 10 Best Performing Warren Buffett Stocks in 2024.
As Abel assumes control in making key investment decisions, Buffett continues sending shockwaves. Nevertheless, he has become a net seller, having trimmed stakes in some high-profile holdings, all but raising concerns about the market outlook.
At 94, Buffett has seen it all, having outperformed the S&P 500 over the years and generated significant returns for his investors. Since 1965, the billionaire investor has averaged returns of 19.8% through his investment firm, nearly double the 10.2% return of the S&P 500 over the same period. Nevertheless, he appears to have hit the peak of his investment career as he became a net seller after one of the longest bull runs.
The recent sales have taken Buffett’s cash haul to the $300 billion mark, which he can use to purchase a good chunk of the S&P 500 companies. Nevertheless, the billionaire investor has shown reluctance to invest in the cash-sitting valuations that have gotten out of hand.
Since Buffett has yet to carry out a massive investment this year, it does not come as a surprise. The advocate of value investing, which involves analyzing the market for undervalued stocks likely to generate long-term value, has been skeptical about valuations.
His reluctance also comes on outperformance in recent years, becoming extremely difficult due to the sheer size of Buffett’s investment portfolio. “We have no possibility of eye-popping performance” given that “there remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others,” Buffett is quoted as saying in an interview with CNBC.
With the S&P 500 up by more than 20% for the year, Buffett has indicated that the market might be too expensive to pursue opportunities at current levels. Consequently, he has opted to stay in cash while locking in profits through buybacks and dividends in some of his top investment plays.
Nevertheless, the market is still full of some of the best Warren Buffett stocks that analysts see material upside to. In the aftermath of the US Federal Reserve cutting interest rateby 50 basis points and indicating the prospects of further cuts before year-end, opportunities are increasingly emerging around some of Buffett’s top investment plays
Even as Buffett waits for the market to correct to deploy the more than $300 billion at his disposal, there are still opportunities to pursue as interest rates trend down. With that, let’s look at the 8 best Warren Buffett stocks to buy according to analysts.
Our Methodology
To compile the list of the best Warren Buffett stocks to buy according to analysts, we sifted through Berkshire Hathaway’s Q2 2024 13F portfolio. We scanned all the 13F holdings and picked the 8 stocks that had the highest upside potential, as of September 24. We have ranked the stocks in ascending order based on their upside potential.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Sirius XM Holdings Inc. (NASDAQ:SIRI)
Warren Buffett’s Q2 2024 Stake: $376.05 Million
Analyst Upside Potential, as of September 26: 37.40%
Number of Hedge Fund Holders: 33
Sirius XM Holdings Inc. (NASDAQ:SIRI) is a communications services investment play that operates as an audio entertainment company. It provides music, sports, entertainment, comedy, talk, news, traffic and weather channels, and other content.
The leading satellite radio provider carried out a one-for-10 share stock split while it was in no danger of being delisted from the NASDAQ. The stock split was one of the catalysts behind the share price’s more than doubled value, and it was seen as one of the plays geared toward attracting institutional investors. The stock split caused the company to reduce its share count from a high of 3 billion to around 339 million.
In addition to the reverse stock split, Sirius XM Holdings Inc. (NASDAQ:SIRI) stock also rose when the company merged with Liberty Sirius XM Group (Liberty Media’s Sirius XM tracking stock). The merger allows Sirius XM to simplify its capital structure and strategy for continued success.
In the second quarter of 2024, Sirius XM Holdings Inc. (NASDAQ:SIRI)’s revenue dropped by 3% compared to the previous year, reaching $2.2 billion. The company’s net income was $316 million, leading to diluted earnings per share of $0.08, which increased from $310 million in the same quarter of the previous year.
Within its core business, Sirius XM Holdings Inc. (NASDAQ:SIRI) had 33 million subscribers who paid directly, but this number saw a decrease of 100,000 during the same timeframe, with a self-pay subscriber churn rate of 1.5%. The revenue from this segment, which was $1.6 billion, experienced a 5% decline year-over-year, attributed to a smaller average number of self-pay subscribers and a $0.42 increase in the average revenue per user in the second quarter.
Even as Sirius XM Holdings Inc. (NASDAQ:SIRI) remains under pressure, it returns value to shareholders. The company has confirmed a $1.2 billion buyback program. It has also affirmed its commitment to the dividend plan with a yield of 4.3%. The buyback and dividend program could help offer support to the stock.
Analysts on Wall Street believe SiriusXM is a strong buy with an average price target of $33.14, implying 32.83% upside potential. Additionally, the stock trades at a discount with a price-to-earnings multiple of 6.60.
In the second quarter of 2024, Sirius XM Holdings Inc. (NASDAQ:SIRI) experienced a notable surge in interest from leading money managers. Insider Monkey’s database shows that hedge fund positions in the company increased from 17 to 33, with these investments collectively valued at around $530 million.
Overall SIRI ranks 2nd on our list of 8 Best Warren Buffett stocks to buy according to analysts. While we acknowledge the potential of SIRI as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SIRI, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.