3 Stocks I bought last month

The market was rolling in September, and I bought into that strength. With lower interest rates, I had too much of my portfolio parked in money market funds. I started turning some of that money into stocks.

Some of the stocks I bought last month include Sirius XM Holdings (SIR -3.15%), PDD Holdings (PDD -0.24%)and Carnival (CCL -2.43%). Let’s take a closer look at why I am willing to risk the security of money for the opportunities that these three investments offer.

1. Sirius XM

We know that pessimism is spent when it comes to Sirius XM. The popularity of premium satellite radio possibly skyrocketed last year. Revenue gains have been anemic for a decade, turning negative in 2023. In a year of rallying prices, Sirius XM has been blown away. The stock is down 53% in 2024, down 27% just last month alone.

The recent weakness is not a surprise. The conversion of majority shareholder John Malone’s tracking stock into Sirius XM common stock — and a 1-for-10 reverse stock split as a result of the transaction — triggered a wave of short selling terms in September. Growth investors have turned the dial on Sirius XM, but today’s situation could be music to the ears of opportunistic value investors.

Image source: Getty Images.

Shares of Sirius XM hit a new 12-year low on Tuesday. It’s a bleak stock chart for a company that has seen its revenue nearly triple and its earnings per share quintupled in that time. There’s no denying Sirius XM’s appeal as a value play here. The stock is trading for just 7 times trailing earnings. Dividend investors will appreciate the 4.7% yield for a company that has raised its payout the most every year since it began paying dividends eight years ago.

It’s not comforting to see the number of Sirius XM subscribers decrease by 618,000 through the first six months of the year. The good news is that the platform still has 33 million subscribers. Churn is near historic lows, as the problem is more the lack of new users than the defection of current listeners. Advertising is currently 20% of the revenue mix, and this is a lucrative demographic group for marketers to reach.

Analysts see a return to growth in revenue and earnings next year, and Sirius XM has been exceeding Wall Street’s profit targets with ease in the past year. Lower interest rates could spur an increase in auto sales, a key driver of new satellite radio subscriptions. As a uniquely positioned media stock that reaches a massive captive audience, Sirius XM deserves better than to be cut by more than half this year.

2. PDD Holdings

Chinese growth stocks have been on the rise lately, and PDD is one of the country’s fastest growing players. PDD previously operated as Pinduoduo, the Chinese e-commerce site of the same name it operates. It is now better known to US investors as the parent company of Temu, the operator of Chinese-sourced merchandise typically housed in US warehouses that trade at ridiculously low prices.

Growth is on a tear. Revenues grew 86% in its last quarter, and profitability more than doubled. This is not a case. Annual revenues have exceeded 90% in five of the last seven years. PDD warns that margins will be tested in the short term as it launches initiatives to improve the platform. There are also fears about how trade tensions will play out for PDD. This is compensated by the valuation of the shares. PDD is trading for just 16 times earnings, and less than 11 times next year’s bottom line estimate. That’s a low multiple for a company that’s growing much faster.

3. Carnival

I owned three of the four publicly traded cruise lines in September. I completed the set by finally buying in Carnival. Why did I save the biggest cruise line for last? Growth prospects or valuations may favor its peers, but Carnival is still destined to move higher as the rising tide of the industry lifts all ship operators.

I bought into Carnival ahead of its better-than-expected fiscal third-quarter earnings report in late September. Revenue and adjusted earnings per share increased 15% and 62%, respectively. Customer deposits are at another high for this time of year, a good sign that the next few quarters will also be strong.

As a growing theme for my September shopping list, Carnival is even cheaper than bullish fundamentals. Carnival is trading for less than 15 times forward earnings, and less than 11 times forward earnings. With Carnival aggressively paying down its debt, some key cost components moving lower, and passengers willing to pay more for a water adventure, it looks like a good ride from here.