Is Coinstar A Countercyclical Play?

February 17, 2009 at 11:54 am  ·  Category: Stocks

On Thursday, Coinstar (CSTR), operator of Coinstar kiosks that convert your spare change into cash for a fee and located at many popular retail locations, reported what appears to be an excellent 4th quarter (CSTR Earnings Release).

I wonder if people are more likely to convert any spare change they have into cash when times are tough.  Or are they more likely to roll it themselves to avoid Coinstar’s 8.9% fee?

Another driver of the strong quarter appears to be their interest in Red Box, the in-store $1 DVD rental kiosk.  On Thursday, they announced they’ll be buying out McDonald’s and other owners of Red Box to attain a 100% stake.

The stock has been on fire – up about 75% in the last 3 months.

I’m having a tough time valuing Coinstar for a variety of accounting reasons but the stock is interesting to me and I’m going to keep working on it.

Disclosure: Top Gun has no position in Coinstar (CSTR).

Posted by Greg Feirman  ·  Trackback URL  ·  Link
 

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