Sirius XM has a different structure than competitors like Pandora and Spotify, because Sirius XM focuses on automobiles rather than mobile and computer software. This leaves Sirius XM untouched in the field, as new entrants like Apple battle it out for the software sector.
In addition, Cohen notes that Sirius XM is growing rapidly and boosting its financials at a time when the auto market looks to be improving.
This is an example of an expert and her remarks affecting the market. Indeed, on the whole, the mean target price for the stock is $3.66. This is 12 percent higher than where the shares opened Tuesday, and reflects a very bullish opinion on the Street.
One thing to be wary of, however, is the exposure that the stock has recently gained. When a very famous person comes out and recommends a stock and everyone in the market buys it up, it often leads to an overvaluation of the price that the market eventually corrects.
The best way to pick outperforming securities is to find the underpriced ones that no one else has noticed. That way, when others realize the value to gain from it, you will capture all of the growth. On the contrary, by following big calls, you allow for the potential to accidentally buy the stock above fair value and lose money when the market corrects itself.