Should You Forget Sirius XM? This Stock Has Made Far More Millionaires.

Key Points

• Sirius XM’s subscriber base and revenue are under pressure, as there’s stiff competition from streaming platforms.

• Despite the stock trading at a cheap P/E ratio, investors might be better off avoiding it.

• A high-quality company with a strong brand, pricing power, and huge profits should be on investor watch lists.

• 10 stocks we like better than Apple ›

Sirius XM (NASDAQ: SIRI) presents investors with a unique situation. On the one hand, it's the only satellite radio provider in the U.S., which gives it a monopoly position in the industry. Viewed this way, there are no direct competitors to the business.

However, the company's shares have been wildly disappointing from an investing perspective. In the past five years, investors would've lost half of their starting capital (as of Sept. 11). Shares currently trade 96% below their all-time high.

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Should investors forget about Sirius XM? That might not be such a bad idea. There's another stock, with a phenomenal 717% gain in the past decade, that has made far more millionaires.

Image source: Getty Images.

Pressing pause on Sirius XM

Shares of Sirius XM are heading in the wrong direction. One key reason why is declining revenue. During the second quarter (ended June 30), sales totaled $2.1 billion, down 1.8% year over year. This figure was 5.1% below the same period three years before in 2022. Clearly, there's something discouraging going on here.

Sirius XM ended Q2 with 32.8 million subscribers for the main service. This number has been steadily falling. So, it's no wonder the top line continues to be under pressure.

Investors can blame better mobile broadband connectivity. This, along with higher smartphone penetration (91% of Americans own a smartphone), has supported the growth of streaming platforms. Sirius XM must go up against popular services from the likes of Apple (NASDAQ: AAPL), Alphabet, and Spotify. This creates a major headwind for Sirius XM.

To be fair, there are reasons for investors to still keep an eye on this business. Berkshire Hathaway owns 37.1% of the outstanding shares, giving it Warren Buffett's stamp of approval.

About three-fourths of Sirius XM's revenue comes from subscriptions, which adds predictability and stability. And the company produces positive free cash flow.

The valuation is dirt cheap. Shares trade at a price-to-earnings (P/E) ratio of just 7.3. As a result of the bargain stock, the dividend yield is healthy at 4.54%. Sirius XM might draw the attention of contrarian investors, but it's a risky play.

Look at this millionaire-making stock

Instead of Sirius XM, maybe investors should take a closer look at Apple. As mentioned, the consumer discretionary stock is up 717% in the past decade. And since September 2005, it has produced a total return of 14,620%. Had you bought just $7,000 worth of the stock 20 years ago, you'd have $1 million today.

When it comes to quality, Sirius XM shouldn't be mentioned in the same breath as Apple. Apple is without a doubt one of the strongest brands on Earth. Supported by its innovative products and services, an exceptional user experience, and effective marketing, the company registers durable demand. And it has developed pricing power.

This makes it incredibly profitable. Through the first three quarters of fiscal 2025, Apple raked in $84.5 billion in net income and $81.8 billion in operating cash flow. These are gargantuan sums that allow management to return lots of capital to shareholders, mainly via stock buybacks, which totaled a whopping $21 billion in Q3.

Apple might have been a millionaire maker in the past, but the future is a bit uncertain. Growth has slowed in recent years, especially as it becomes more difficult to drive the same level of excitement when new product launches provide marginal improvements. Wall Street analysts forecast a revenue gain of 11.4% between fiscal 2025 and fiscal 2027.

Apple is still a wonderful business, and every long-term investor should continue to follow it. Now isn't a good time to be a buyer, though. The stock trades at a steep P/E multiple of 34.9. Only if shares draw down substantially should Apple stock be added to the portfolio.

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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, Berkshire Hathaway, and Spotify Technology. The Motley Fool has a disclosure policy.