Etrade Bankruptcy?

Etrade- One of the survivors of the mortgage and financial meltdown has been a bit of a scary stock lately. A couple weeks ago we saw a shutdown of the stock taking it down to about $1.30/share when just in mid October we saw it hitting around $1.99. Wow well why is this happening? This is what I think, uncertainty towards bankruptcy!!! Investors are banking on the fact that Etrade will merge with one of the big houses. We are talking TD Ameritrade, Schwab, Scottrade...Etrade has grown at an amazing rate compared to the other houses. The baby talking campaign has done wonders for the company and they are spending tons on advertising for their product and it seems to be working. The bigger brokerage houses like this and feel that as opposed to advertising they should just gobble up Etrade and take on a huge group of customers.

So, what's the deal? Well, the fear about Etrade is that a bigger house will take up the brokerage business alone and leave the polluted toxic mortgage business alone. Which I believe is the reason the stock hit $1.30. There has been talk lately that TD Ameritrade's CEO is looking to acquire some brokerage house soon. So traders scooped up Etrade and drove the price 14% in one trading day. So much back and forth with this stock that it gives you a headache but I believe ultimately that Etrade as a whole will be acquired soon. On the flip side if we don't see Etrade acquired in the 2nd quarter of 2010. Watch out this company could hit $10 in a year or two, the company has stood pretty resilient since hitting their lows in March. But their one downfall is their Heloc portfolio is very messy, how ever they have been making strides to make these loans either write off their books or to get them taken care of. As far as I know at least.

So what do I see with Etrade? I really believe it has to do with the new CEO that will take over after December of this year. If we are looking at an acquisition type CEO well you can kiss Etrade good bye. How ever, if we are looking at a CEO that specializes in making strides in companies then the talking babies will be here to stay...

CSTR? ETFC?

Well...here we go again...I am reco-ing two stocks for the next 3 months of the year. Our good old friend Coinstar and a heavy hitter E-trade...Now some background information about our two companies.

Coinstar- Leader in grocery store counting systems and the redbox kiosks you will see at your local grocery store or Wal-Mart. Coinstar establishes the kiosks at their own discretion which are placed at high traffic department stores and grocery stores. Essentially these machines have taken over for what Blockbuster provided. Basically you can look at them as a vending machine for movies. A great platform that seems to be working.

Etrade- One of the leaders of online discount brokerages and own one of the most infamous campaigns of baby talkers making trades using Etrade. Now Etrade was one of the few companies to dispel huge losses due to the credit crisis. Especially in distressed Heloc loans, so bad that instead of a 7 cent loss in their 3rd quarter earnings led to a 63 cent loss in earnings due to an increase in loan loss provisions. Regardless they are one of the fastest growing online traders as far as subscriber growth. As well as transactions with their account holders.

So why should you invest in these two companies, well there are two seperate reasons for each company. In regards to Coinstar they are high cash and high customer loyal. Granted Netflix has an incredibly huge inventory and a recurring customer base, Coinstar hits a different demographic that cannot afford a monthly subscription that Netflix institutes or $4.95 that comcast requires for a rental. $1.00 for a one night rental is an incredible value and not only does coinstar make money off the rentals but they also make money off the kiosks which they sell to the Targets, QFCs, and Wal-marts. The one thing that may get in Coinstar's way is management and licensing as of right now though it seems okay...Buy and hold for six months.

Now Etrade, an incredible obvious take over opportunity here. Etrade is trading at about $1.53 a share and is looking to have increasing profits quarter after quarter. The stock has been battered as of late believing that no one will acquire the company. Well, management looks to believe this is possible and Etrade's CEO is stepping down at the end of the year. There are rumors that Ameritrade may be acquiring the company which would be great for Ameritrade's market share in the financial services industry. The reason I like the stock is our friends at Goldman Sachs are offering a buy rating on the stock and a price target of $2.30 in qtr 1 2010. I believe in a buy and hold until first quarter 2010 and pray for a takeover soon...