Coinstar (CSTR): Poor economy turns coins into dollars

Posted Mar 5th 2009 1:20PM by Steven Halpern
Filed under: Newsletters, Stocks to Buy, Recession

Growth stock expert Steve Rawls sees "dollars" from a company that helps sorts "coins." In his The Tipping Point Stocks newsletter, the advisor takes a look at Coinstar, Inc. (NASDAQ: CSTR).

"Often we miss the obvious. We miss how the little can equal the large. Consider your last visit to the supermarket. You probably passed by that machine that offered to count your pennies for a small fee. It's neat for people who saved their pennies, but not for you, right?

"What if I told you that the coin machine you just passed by with little thought was part of a $1.2 to $1.3 billion enterprise? Welcome to the world of Coinstar.

"Coinstar is the owner of that machine - and thousands more just like it. And the machines are becoming a mint for the company, as you can see from its fourth-quarter earnings report.

"On February 13th, CSTR reported earnings of 15 cents versus a year earlier loss of $1.34 per share. CSTR also lifted Q1 and fiscal-year earnings guidance.

"Why the jump? Everyone is looking for more cash these days. The penny is all of a sudden taking on added value, where it was becoming a forgotten step-child for many years. People are pulling out those jars of coins and cashing them in to help pay the bills. And CSTR is reaping the benefits.

"This isn't a trend that's going to end any time soon. As long as the economy struggles, the demand for cash will remain strong - especially as interest rates go up. So you can expect the trend in CSTR's stock to continue.

"Right now, the stock is trading above both its 50-day and 200-day moving average. And, as you can see in the chart, there was a strong gap higher on February 13th. We'd exit Coinstar if the stock closes the gap, as evidenced by a close below the February 12th high of $23.65."

Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.

Tags: banking stocks, BankingStocks, coinstar, cstr, financial stocks, grosth stocks, GrosthStocks, recession stocks, RecessionStocks, small ap stocks, SmallApStocks, steve rawls, SteveRawls, thestockadvisors.com, tipping point stocks

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Reader Comments (Page 1 of 1)

3-05-2009 @ 1:55PM

murph said...

fools and their $$ are soon parted. Coinstar takes like 9 cents on the dollar. considering i usually have $3-500 worth of change when i cash it in, this adds up to $20-30. that's why i go to either a local bank or Commerce (now TD Bank) where there are no fees.

3-05-2009 @ 2:56PM

ThatHollie said...

If you receive your total as a gift card instead of cash back, the fee is waived. I always get an Amazon code, so I get 100% of my coin value.

Also, the Coinstar machine seems more robust...maybe this is my imagination, but every time I go to my local credit union, their coin counting machine is broken again.