It’s been a difficult year for Sirius XM Holdings (NASDAQ: SIRI) investors. The satellite radio operator’s shares have been cut in half this year, making it one of the worst mid-market investments this year.

In 2024, a lot has gone wrong for the country’s satellite radio monopoly. The subscriber base is shrinking, and the follow-up stock conversion and subsequent reverse split didn’t go over well. But things should get better from here. Let’s take a look at some of the reasons why one of this year’s biggest laggards could become the market leader in 2025.

1. Stock is cheap

A recovering market has sent valuation multiples higher for most stocks in 2024, so let’s look at the bright side of Sirius XM’s reversal slide this year.

Sirius XM is still a money-making machine. Expected to generate $2.7 billion in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) reached $8.675 billion this year. This should be another year of 10-figure free cash flow.

Sirius XM faces some challenges in attracting new listeners. But value investors should hear this: Sirius XM is cheap. Analyst estimates have been steadily falling, but the stock trades at just nine times forward earnings. Income investors can earn a 3.9% return from a company that: increased his payment for eight consecutive years.

Some stocks with single-digit earnings multiples are value traps, but Sirius XM has proven resilient over the years. It still hosts 33.2 million subscribers, and its audience is more loyal to the platform than you might think. The monthly loss of 1.6% is near a historical low. Its balance sheet continues to improve, and it has been aggressively buying back shares for a dozen years. A rare bargain waiting for value stocks to come back into fashion.

Image source: Getty Images.

2. Sirius XM can keep up with political changes

Sirius XM was well positioned to win no matter who came out ahead of last week’s US presidential election. If Vice President Kamala Harris had won, Sirius . These are moves that will put more money into the wallets of the young adults Sirius XM needs to turn to to grow again. Anything that expands the middle class also expands the addressable market for Sirius XM.

Under President Trump’s proposals, he would still be fine. Trump’s plan to cut corporate tax rates is expected to boost after-tax earnings. While Harris hopes to raise the corporate buyback tax from 1% to 4%, Trump’s arrival means one of the market’s most diverse buyers will continue to nibble on its own shares. Sirius XM has reduced its outstanding shares by approximately 45% over the last 12 years. Trump has proposed tax cuts for groups such as tip earners, family caregivers and auto loan interest payers. Anything that gives consumers, especially car owners, a breather will make it easier to reverse subscriber losses in 2025.

3. Warren Buffett is getting serious about Sirius

Sirius XM is one of dozens of investments Berkshire Hathaway‘s (NYSE: BRK.A) (NYSE: BRK.B) stock portfolio. As well as shares of the satellite radio provider Liberty Sirius XM Group We’re tracking the shares ahead of the September reversal.

When Sirius Berkshire Hathaway increased its position last month and currently owns nearly a third of Sirius XM’s outstanding shares.

media stock It’s not perfect, but it’s not half as good as the company at the beginning of this year. With a cheap valuation, political headwinds and a generation of investors in its corner, Sirius XM could be the ultimate comeback stock of 2025.

Should you invest $1,000 in Sirius XM right now?

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Rick Munarriz They have positions in Sirius XM. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a feature disclosure policy.