There are still bargains to be had, even in a market that continues to climb the proverbial wall of worry. Shares of Sirius XM (NASDAQ: SIRI), Royal Caribbean (NYSE: RCL), and Upbound (NASDAQ: UPBD) are trading at low earnings multiples, and that’s just the beginning.
The three very different businesses are growing, though at different rates. It also doesn’t take a lot to get started. Even your next $1,000 can go a long way with these three dirt cheap stocks. Let’s take a closer look.
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1. Sirius XM
If you want to subscribe to satellite radio, you really only have one choice. Sirius XM has had the market cornered in the premium niche since the combination of the only two providers 18 years ago. Today, Sirius XM is a media stock with a massive audience, an equally substantial quarterly dividend, and a popular platform that is starting to turn things around.
Sirius XM entertains 33 million total subscribers. It’s largely drivers paying for coast-to-coast coverage of commercial-free music and ad-supported talk, news, sports, and comedy content. The business has slowed in recent years. The churn rate remains historically low, but younger drivers aren’t flocking to the service. Between the emergence of the connected car and the growing cost of auto ownership, subscribing to Howard Stern and more isn’t as compelling these days.
After three years of modestly declining revenue, there are signs of stability. Sirius XM has posted back-to-back quarters of marginal year-over-year increases. It’s not much, but it’s progress.
Even when sales were inching the wrong way, Sirius XM was easily topping $1 billion in free cash flow. It’s highly profitable, trading for less than nine times forward earnings. Sirius XM has also been aggressively returning money to its shareholders through stock buybacks and dividend distributions. It’s currently yielding almost 4%.
I’m not the only one who sees the value in Sirius XM. Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) has been building up its stake in the past three years. It now owns more than 37% of the company. The near-term prospects may be fuzzy with gas prices rising and consumer confidence waning, but like its own platform, there’s always something good if you make your way around the dial.
2. Royal Caribbean
Among the three leading cruise line operators, Royal Caribbean is the priciest. It’s still cheap on an absolute basis. The cruiser is fetching 15.7 times forward earnings. It offers a recently raised quarterly dividend yielding 1.8%.
