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How to Cash In on Coinstar's Redbox

Written By Brian Hicks

Posted May 8, 2010

 Welcome to the Wealth Daily Weekend Edition — our insights from the week in investing and links to our most-read Wealth Daily and sister publication articles.

What a week.

The cataclysmic collapse of the euro… Fears of debt contagion in Europe… The possibility of the oil spill hitting U.S. land… And fears over UK elections managed to destroy most — if not all — of the gains racked up in 2010.

But that didn’t stop some readers from raking in 1,100% gains. Simply by watching small changes in consumer shopping trends and the way consumers were renting movies, these investors caught the opportunity of a lifetime.

Here was Blockbuster warning of bankruptcy and Movie Gallery closing its doors, as Netflix and Coinstar were picking up more market share and their stocks skyrocketing.

Here we had Netflix running above $100. Nobody was paying attention to Coinstar at $35.

But we were.

We knew that consumers wanted more convenience and cheaper prices… and that the brick and mortar companies (Blockbuster and Movie Gallery) couldn’t keep up. We knew it was only a matter of time before our under the radar stock went mainstream.

And it did… in a big way. Take a look:


Coinstar chart 2010



Coinstar would jump from $35 to more than $52, sending our June 2010 call option from $1.25 to more than $15…

But even $52 is too cheap. This could easily be a $60 — even an $80 — stock near term because they understand consumers.

And it’s not as if growth is a problem. 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.

But this isn’t the only opportunity to make money in this chaotic market…

There are a few more ideas below from the pages of this week’s top-read articles in Wealth Daily and our sister publications, Energy & Capital and Green Chip Stocks.

We’re confident that our editors will give you at least one or two investment ideas to mull over through the weekend.

Stay Ahead of the Curve,

Ian L. Cooper
Wealth Daily

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