The Next Stock going to $100
Coinstar is exploding on great earnings... and it's not surprising.
As we said in Wealth Daily a few months ago:
It's the easiest way to make money in this market
If you want to make money in this market, take a look at what consumers are doing... what they're buying... and why they're buying it.
These are the ultimate indicators.
Observing these trends is exactly how we made 82% on Coinstar calls in about two weeks — and how 37 of my Options Trading Coach readers just cashed out with 1,650% max gains on the same trade.
And all we did was pick up on small changes in consumer DVD shopping trends...
We knew consumers wanted more DVD-rental convenience and cheaper prices... and that the brick and mortar companies (Blockbuster and Movie Gallery) just couldn't keep up.
So we caught the new consumer DVD trend, picked up Coinstar, and watched it explode from $35 to more than $50 in a few short weeks.
We caught the buying opportunity of a lifetime.
And we're about to catch it again — for a potential 1,650%
Until recently, the DVD-kiosk business has been ruled by Coinstar's Redbox, which collected more than $774 million in sales last year alone, in a market valued at $950 million.
They just raised their 2010 outlook and posted a profit that easily beat expectations...
The company is projecting a 2010 profit of $1.82 to $1.94 a share, bettering a February 2010 forecast of $1.50 to $1.60 a share. And that's after the company earned $6.4 million, or 21 cents a share (exceeding 13-cent estimates), as revenue just about doubled to $350 million from $239 million.
Better yet, the company says more than 150 million people every week are within 10 feet of a Redbox stacked with 700 discs.
No membership is required; videos can be returned to any location; and renters can hold onto the discs for as long as they want.
Plus, Redbox only pays about $18 for a disc and rents it about 15 times at an average cost of $2 a pop.
It isn't hard to see how difficult it is to compete with this system — and why a crippled Blockbuster isn't happy. But what do they expect? Any consumer would rather shell out a dollar with no strings attched, than $4.50 or more for a two-night rental...
Coinstar remains a buy.
So does this kiosk company...
The nation's biggest ATM maker wants to compete
NCR, the company that makes automatic teller machines and kiosks is ready to do some transacting for themselves.
They've already rolled out DVD-kiosks across the United States to prove they're serious... desiring a piece of an industry expected to grow 37% this year to $1.3 billion.
But don't run out and risk the house on these guys just yet. You will want to play it safe.
We're still slightly concerned that they don't have any agreements with studios... yet. But that shouldn't be a long-term issue, as they plan to offer something that Coinstar does not: sales.
NCR wants to "use the kiosks to sell DVDs, giving the studios a chance to recoup lost DVD sales revenue and possibly encourage impulse DVD purchases,” according to CNN.
And that alone could prove to be a gold mine.
Here's how to profit
Sure, you can buy the underlying NCR stock up to $14... but if you want to see the big gains, you must use options.
I don't care what "experts" or CNBC would have you believe about "scary options trading." Options trading is quickly becoming the preferred way to make serious gains while limiting risk.
Take Coinstar stock as an example...
When we first mentioned Coinstar to readers, the stock traded at $35. It's now at $55 — a fine gain, if you're comfortable with scant gains of 57%.
But we want the explosive gains — the 1,650% gains that 37 of my readers can retire with. And to do so, we must employ options.
Truth be told, you have just as great a shot at grabbing the options profits that are sitting on the table as any other investor out there today.
Yes, there's risk in any investment you make; but without risk, there's no gain.
Even Warren Buffett, the world's most successful investor, understands that. He often uses options to reduce risk in stocks and profit from stock fluctuations at a reduced cost. He knows the power options can have when you make a sound decision based on sound analysis.
Options proved to be the only way to make 1,650% on a stock like Coinstar... and options trading is the only way you'll be able to do it with NCR shares.
Here's more good news from Barron's:
"Coinstar (CSTR), parent of the Redbox video rental kiosk business, is making plans to take on Netflix (NFLX) in Web-based movie distribution, the Los Angeles Times reports. The piece noted that the company plans to offer a monthly subscription plan similar to the one Netflix offers, although Coinstar so far has not discussed its pricing strategy.
Meanwhile, on the company’s post-earnings conference call yesterday afternoon, CEO Paul Davis said that the company is confident that “physical DVDs and Redbox kiosks will remain relevant for a very long time to come.” But he added that consumers have told the company they want a broader selection than the kiosks provide. “So, while we are confident in the future of DVDs, we believe an expanded offering via digital could be a natural evolution to augment our core business,” he said.
Davis said the company has concluded that the best approach will be to part with another company or companies in the digital market.
“This would enable us to leverage our combined strengths and maximize ROI without Redbox having to invest significant capital to either fully build the technology ourselves or acquire content from a third party,” he said. “Over the past few months, we have conducted a deliberate and rigorous review of potential partners to ensure we enter the space with a winning solution for our consumers and shareholders. As a result of this work, we are currently in detailed discussions with a number of highly interested parties. It is clear from these conversations that potential partners both appreciate and value our key advantages that make us an attractive and unique partner.”
He added that the company plans to launch a Redbox-branded digital strategy in the market in 2011.
The company did not discuss specific potential partners."0