This Ridiculously Cheap Warren Buffett Stock Could Make You Richer

The last few years have been hard SiriusXM (NASDAQ:SIRI) Shareholders. The stock is down more than 50% since the end of 2022 and hit another multi-year low just a few days ago after releasing a disappointing sales forecast for 2025 – the company expects its sales to fall next year.

However, there is at least one brilliant investor who refuses to be discouraged. This is Warren Buffett. He’s using the recent weakness as a buying opportunity, adding another 5 million shares of Sirius XM just a few days ago Berkshire Hathaway‘S (NYSE:BRK.A) (NYSE:BRK.B) existing share. This purchase increases the position to more than 117 million shares worth about $2.7 billion, representing about a third of the satellite radio company.

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What does Buffett see that most other investors obviously don’t? Value, for example. But he also seems to be seeing the bigger long-term picture that is otherwise obscured by short-term turbulence.

The competition has finally caught up

You know the company. Sirius XM is the result of the merger of rival satellite radio names Sirius and

However, looking back, this pairing began to take shape right when the company was experiencing its highest growth. By this point, broadband internet connection had become the norm, giving rise to streaming music platforms such as Spotify and Pandora (which now owns Sirius XM). This period also began the proliferation of smartphones, giving consumers a convenient alternative for accessing music and conversations. AppleThe iPod and iTunes were also still on the rise at this time. Sirius

Last year, those rivals finally turned the tide as Sirius XM’s revenue peaked after numerous pandemic-related fluctuations. The same goes for income and free cash flow.

Data from YCharts.

That’s the main reason why stocks have now halved. Largely lost in the noise, however, is the fact that the company is finally implementing changes that should have been made years ago.

Meet the new and improved Sirius XM

One of these developments is the modernization of technology that allows advertisers to advertise through Pandora more effectively. In June, Sirius XM announced that it would integrate Pandora’s self-service AdsWizz engine The trading deskUnified ID 2.0 technology offers advertisers an “identity solution with precise targeting, frequency management and measurement.” This type of granulation and response tracking has become standard across all areas of the web advertising world.

The Trade Desk introduced similar technology for Sirius XM’s ad-supported programming.

Additionally, Sirius recognizes how competitive the Internet and its many branches are and is redoubling its efforts where it can win. As part of its strategic update released just a few weeks ago, the company announced that it is expanding its marketing efforts in the automotive space, focusing on driving sales where 90% of its subscribers use Sirius XM technology integrated into their vehicles.

In the future, the company will continue to place great emphasis on doing something that it has probably never done well enough. This means weighing the cost of acquiring specific customers and then prioritizing customers with the highest lifetime value while prioritizing high-churn potential customers. Meanwhile, Sirius will

These new efforts will not immediately bear fruit. The $8.5 billion revenue forecast for next year is actually below this year’s expected revenue of $8.7 billion and also below analysts’ consensus estimate for 2025 of $8.6 billion. EBITDA and free cash flow are also likely to face headwinds.

However, investors looking at these disappointing statistics need to look at the bigger picture, just as Warren Buffett and his people do. The actions Sirius XM is taking now are aimed at making the most of this company’s strengths while minimizing its weaknesses.

From here, Buffett’s bet is hardly a high-risk bet

In any case, that’s the bet Warren Buffett is making on behalf of Berkshire, although it’s hardly a bet that could be considered a big risk. Even the analyst community expects sales growth to accelerate again from the year after next, coupled with even faster profit growth.

Data source: StockAnalysis.com. Chart by author.

However, this promising revitalization effort is still not the only reason why Buffett is adding more Sirius shares to an already sizable holding. He buys more of this ticker when the price falls, largely because it’s a bargain and the price is less than eight times next year’s expected earnings of $3.05 per share and less than six times the earnings estimate of $4 US dollars per share for 2026 is. Even for a company like this that’s in restructuring mode, that’s cheap; The company’s current headwinds appear to have already been priced in.

And it’s not that there’s no benefit to getting in now – although it’s not clear when better results might push the stock higher again. Newcomers will get in while the stock’s forward-looking dividend yield sits at nearly 4.7%. You’d be hard-pressed to find another stock with as much upside potential that pays a dividend like this.

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James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, Spotify Technology and The Trade Desk. The Motley Fool has a disclosure policy.