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After Tuesday’s Fed announcement, which not only held rates at 0% but also hinted at the possibility of more quantitative easing, it should be pretty obvious that individuals and households are nowhere close to revisiting the go-go days of the middle part of last decade. Sure, the American pastime of conspicuous consumption will not disappear anytime soon, but consumers will cut corners here and there in order to compensate for paying $500 for an outfit consisting of $TRLG jeans and an Ed Hardy shirt.
As an example of such cost-cutting measures, instead of paying $40 for popcorn and a ticket at their local movie theater to see Tom Cruise play a one-eyed Nazi, they will either subscribe to $NFLX, or conveniently choose movies on a whim, a la carte style, at a strategically placed Redbox (a subsidiary of $CSTR) in their local pharmacy, supermarket or McDonald’s. We know $NFLX has seen a tremendous run over the past several quarters, but $CSTR may be tapping into an unfortunately growing market of low-end consumers who refuse to subscribe to a $NFLX monthly fee. In addition to their Redbox DVD rental business, Coinstar also has a strong self-service coin-counting machine business which, again, is going to continue to flourish so long as unemployment is high (think digging though sofas to find loose change to buy a Value Meal).
Looking at the daily chart, seen below, I believe an attractive risk/reward long setup is upon us. The stock had a huge spike in late April, and ever since has been working through a falling channel. Currently, the stock is awfully close to completing the gap full back to April, as well as touching the 200 day moving average. I have the stock on my list of scans, and will be watching it closely in the coming days.
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About the worst I’ve found anyone had to say about Redbox was that the selection is necessarily limited. So I was thinking about burn-on-demand for titles not already stocked. I wonder if they are? Anyway, looks like a great setup.
Very cool Idea! Just noticed one the other day at a local grocery. Everybody was standing around it and blocking the entrance to the door. Your may be on to something really big here!
Foodland, Koko Marina.
Coinstar recently increased the coin counting fee to 9.8 percent. I bailed on them as a customer, on general principal that 10 percent is too much. Now I feed my coins to the self check-out machines at the grocery store, when things are not busy.
I think this is an example of the Stupid American, that someone would pay ten percent for this service. This is how middle and lower class America digs themselves in deeper, by their own choice.
who buys movies, you can get them for free up on warez 🙂 and that folks is why i can’t participate in the movie market – i’m out of touch – or rather, ahead of the curve. if people really wanted to save money ….
I have Netflix subscription as well as being a regular at Redbox. While Netflix is in the mail, I go to Redbox. Heck, it’s only a buck as long as you return it by 9PM the following day. Redbox in our supermarket is really busy. As for the Coinstar machines, one of my customers sold me a $5 Liberty Gold Coin she found in the reject coin tray. The machine wouldn’t count it which made think that may be Coinstar makes additional money on silver coins as well? Yesterday, I bought a starter lot with CSTR. Thank you Chess for the additional insight.
good luck on CSTR – been there done that..I don’t do stocks for the unwashed subset nor do I like the company ..biggest value is the copper dropping inside the machine..I’d rather keep on keeping on with NFLX….Does AMZN buy NFLX?