Investors in Sirius XM Radio Inc (NASDAQ:SIRI), Alaska Air Group, Inc. (NYSE:ALK), and Zillow Inc (NASDAQ:Z) have gotten richer recently as the stocks have kept moving upwards. Apart from the general strength in markets, fundamental attractiveness of these stocks is another factor contributing to the growth. Here is a closer look:
Sirius XM Wins in Auto Sales
Market observers always reckoned Sirius XM Radio Inc (NASDAQ:SIRI) had tremendous growth potential, and the company has delivered on this front even during recent periods of economic uncertainty. A stock price surge of 81 percent over the last 12 months is reflective of past performance as well as future expectations. In the last financial year ended December 2012, Sirius XM reported a 13.8 percent surge in sales and the trend continued in the first quarter as well, during which its sales jumped 11.7 percent to $821.7 million while a profit of $123.6 million translated into a net margin of 15 percent.
Going by the announcement that the company added 715,000 net new subscribers in the second quarter, this robust performance should continue going forward as well. What’s noteworthy is that the majority of these additions came on the back of strong automotive sales. As a result, Sirius XM Radio Inc (NASDAQ:SIRI) upped its full year guidance for total net subscriber additions to 1.5 million from the previous level of 1.4 million. Compared to Sirius XM’s current price of $3.7, Goldman Sachs Group, Inc. (NYSE:GS) has a target of $4.25 on the stock. At its current price, the stock is valued at 7.5 times its trailing 12 months earnings and being the only noteworthy satellite radio service provider, it is not really a stretch to say that $4.25 is pretty much in sight.
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Alaska’s Sales Jump
Regional airline stock Alaska Air Group, Inc. (NYSE:ALK) recently jumped after announcing an increase in its fee structure that is aimed at bumping annual sales by $50 million. This effectively reversed the declining trend in the stock but there are more reasons to look closely at this stock. Important among these is a growing and profitable business which saw a 9 percent jump in sales during the latest quarter ended March 31, 2013. Although profits dipped slightly during the period, higher charges for checked baggage and for changing or cancelling tickets seem to have returned confidence among investors.
Limiting capital expenditure and returning excess cash to shareholders are some pointers towards sustainably profitable operations. It has initiated a regular quarterly dividend of 20 cents which works out to annualized yield of 1.3 percent. Among other positives are reasonable valuation levels seen in price by sales ratio of 0.9 and a forward price earnings ratio of 9.7 percent.
If Sales Grow, Profits Will Follow
Zillow Inc (NASDAQ:Z) offers real estate and home-related information on the internet. It makes money by selling vital information to consumers and brokers for buying, selling, renting, borrowing and remodeling homes. Its paid subscription package, Zillow Pro, recently crossed 100 brokerage partners and the company has been on an acquisition spree. It has recently acquired smaller competitors such as RentJuice Corporation, Buyfolio, and HotPads. Even though Zillow is not making serious profits as yet, sales growth has been impressive.
In the latest quarter ended March 2013, the company posted a 70.6 percent jump in sales to $39 million and this was no flash in the pan. It has managed to grow from $17.5 million revenue in 2009 to $116.8 million in 2012. As with most online businesses, a wide majority of Zillow Inc (NASDAQ:Z)’s assets are its databases of property listings – something that is difficult to quantify. However, prospective investors can find confidence in the fact that the company is debt free, has a growing business and boasts of positive reviews from analysts.
Overall, all the three stocks mentioned here are excellence picks for the long term although Zillow Inc (NASDAQ:Z) could underperform in the short term given the street’s narrow focus on profits as a measure of success.