By Michael Cintolo, Editor of Cabot Market Letter and Cabot Top Ten Trader
From Cabot Wealth Advisory 7/5/12 Sign up for Cabot Wealth Advisory free e-newsletter
My stock idea for today is a stock that is one of the first to reach new high ground during the past couple of weeks. It's Coinstar (CSTR), which has made hay with its coin-counting machines and its popular Redbox DVD rental kiosks. Here's what I wrote about the company in the June 25 issue of Cabot Top Ten Trader:
"Coinstar started many years ago with its namesake coin-changing machines; for a fee just under 10%, people can bring their change to a Coinstar kiosk and get cash back, gift cards to popular retailers like Amazon.com, or even recently, fund their PayPal account. Then came the firm's move into DVD rentals with its Redbox kiosk, allowing users to rent new, popular movies for just $1 per night; the company went from a few hundred locations to more than 20,000 in just a few years. That has been the main driver of the company's tremendous sales and earnings growth in recent quarters. At this point, analysts see earnings flattening out after 2011, as Redbox growth slows and as streaming video possibly takes a bite out of business. However, we're not so sure--the company is aiming to be the King of Kiosks in a sense. Coinstar's next avenue of growth could be its coffee kiosks; called Rubi, there will be 500 placed by the end of the year, offering Seattle's Best coffee (a Starbucks brand) and other specialty drinks, starting for just a buck. Management eventually thinks it could have 15,000 of them around the U.S.! Other than that, Coinstar is testing video game rentals and even "eco-ATMs" that give cash for used, old cell phones. The company clearly has expertise in rolling out these kiosks, so if Rubi is a hit (so far it's garnering more than $10,000 in annual revenue per test machine) expect it to blanket the country in no time. Said another way, we think this growth story has legs."
Interestingly, the day after I wrote that, the firm announced that earnings this year would take a hit because of a recent acquisition; it was a short-term negative, long-term positive sort of announcement. The stock opened down but closed higher that day on good volume, and since then, CSTR has moved to new highs. There hasn't been blowout-type volume on the upside, but there have been solid buying trends.
If you're game, I think you could buy some around here, with a stop near 64. Earnings should be out around the end of the month.
Editors Note: Mike Cintolo is editor of Cabot Market Letter, which Hulbert Digest (the keeper of the keys of newsletter performance) ranks the third best-performing newsletter in the country during the past five years. Mike has produced such returns by fine-tuning Cabot's time-tested (since 1970!) stock picking, portfolio management and market timing rules to guide the Market Letter's Model Portfolio--a concentrated portfolio of the market's most dynamic growth stocks. If you're tired of being tossed around by the news and market pundits, and instead want to follow a proven editor with a proven track record, I highly recommend giving the Market Letter a try today. Click here NOW to learn more.
From Cabot Wealth Advisory, 4/30/09 Sign up for free Cabot Wealth Advisory e-newsletter
Next week, keep an eye on Coinstar (CSTR), which operates the Redbox DVD kiosks, which you might have seen at your local convenience or grocery store. I've used it, and it's cheap ($1 per night) and easy (you can reserve your movie online and return it to any Redbox kiosk, not just the one you rented it from). Coinstar's earnings have been declining, but big growth is forecast starting in the second quarter. Earnings are due out next Thursday; if the stock breaks above 35.5 after earnings, it should be a good buy.
Editor's Note: Michael Cintolo is the editor of Cabot Top Ten Report, which discovers the 10 strongest stocks in the market each week. The Report routinely beats the market by finding strong leaders like these past picks: In 2005, Hansen Natural gained a whopping 570%. In 2006, NutriSystem was up an amazing 480% in 11 months. In 2007, DryShips was up 510% in 10 months. Even during 2008's bear market, Cabot Top Ten Report found winners in stocks like Cleveland-Cliffs, which doubled in four months, Continental Resources, which rose 160% from its recommendation to its peak, and Walter Industries, which rocketed from 42 in January to 112 in early July. Click the link below to discover the strongest stocks in the market today.
Vice President of Investments and Editor of Cabot Market Letter and Cabot Top Ten Weekly
A growth stock and market timing expert, Michael Cintolo is editor of Cabot Market Letter and Cabot Top Ten Weekly. Since joining Cabot in 1999, Mike has uncovered exceptional growth stocks and helped to create new tools and rules for buying and selling stocks. Perhaps most notable was his development of the proprietary trend-following market timing system, Cabot Tides that has helped Cabot place among the top handful of market-timing newsletters numerous times.
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