"Now could be your chance to pick up Coinstar (NASDAQ: CSTR) at a bargain," Brandon Clay pointing to the firm whose macbhines turn coins into cash. In his Invest with an Edge he states, "We recommend the stock as a recession-resistant, consumer play in a shaky market."
"There are three reasons why we like Constar. First, it's a consumer-savvy play. The company is built on perennial consumer-driven services.
"Their flagship Coinstar machine turns idle change into cash. For every dollar consumers drop into the grate, Coinstar makes $0.089. It may not seem like much, but this simple idea grew CSTR from an idea in 1992, to a $912 million company last year.
"In addition, they have diversified their offering with prepaid phones, global money transfers, and other financial services. This year they finished buying another winning idea - the 'Redbox' video-rental machine.
"This brings us to the second reason you should consider Coinstar: their penchant for strategic acquisitions. Redbox was a great buy. It seems consumers are more likely to pay the now-ubiquitous Redbox $1 per night, than fork over $5 to Blockbuster for the same movie.
"With kiosks located at McDonald's, Walmart, and Walgreens, Redbox has earned a 9% market share of the overall DVD rental market.
"There's still much to grab from the high-overhead, traditional video stores as they plan to install 20,000 Redboxes by the end of the year.
"The third reason to load up on CSTR is the nature of their business. It takes time to build relationships with the nation's largest retailers. But over time, Coinstar has ensconced themselves as a self-service giant.
"They built their services over years of testing and sales. Instead of taking up floor space, they actually drive more traffic into stores.
"This creates a win-win relationship with Safeway, Walgreens, or Walmart. Coinstar's diversified product line is almost as stable as the host business itself.
"Coinstar has been on a tear in recent weeks. When they announced the Redbox deal, CSTR jumped in expectation of continued DVD rental growth.
"Timing your entry will be key on this one. Coinstar shares have pulled back this month, and we expect its volatility to allow for an opportunistic buy when the market temporarily dips."
Steven Halpern's TheStockAdvisors.com offers a free daily overview of the favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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