Editor's note. Blockbuster Express kiosks were licensed, not owned, by NCR before ultimately being sold to Redbox. The Fool regrets the error.
Consumer goods analyst Austin Smith discusses why his opinion on Coinstar (NAS: CSTR) , and its Redbox DVD rental system, has changed. Austin believes Coinstar is undervalued after looking at its relationship with Starbucks (NAS: SBUX) , Verizon (NYS: VZ) , and eBay (NAS: EBAY) . With growth still more than 20%, and strong relationships with key supermarkets and pharmacies, Coinstar can easily add more kiosks supplying DVDs and other products to its existing locations and spur future development. While risks include slowing growth and delays in distribution, Coinstar's innovative business model and prospects for expansion lead Austin to be bullish on this company.
If Austin has one criticism of Coinstar it's that it lacks a dividend. As a growth company, this is somewhat expected. If you're the type of investor who prefers that steady income stream, though, you should read up on some high-quality dividend stocks we think will perform well over the long run, check out The Motley Fool's free report, "Secure Your Future With 9 Rock-Solid Dividend Stocks." It's free. Just click here.
The article Why I Was Wrong About Coinstar originally appeared on Fool.com.
Austin Smith owns shares of eBay and SUPERVALU. The Motley Fool owns shares of Starbucks and SUPERVALU. Motley Fool newsletter services recommend eBay and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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