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Sunday, November 15, 2009

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...