This Week's 5 Smartest Stock Moves

If you're feeling good about the market, you're not alone. Take my hand as we go over some of this week's more uplifting headlines.

1. You've got "Welcome"
AOL
(NYSE: AOL  ) may be more valuable than you think.

The dot-com legend is jumping into the Groupon game, repositioning its Wow.com domain as a hub for daily deals instead of a gathering place for World of Warcraft addicts.

Serving up daily deals with a localized bent has helped propel Groupon to a value of roughly $1.4 billion, based on its latest round of venture-capital financing. Launching a clone doesn't automatically tack on that kind of value, but keep in mind that AOL's enterprise value clocks in at a mere $2.3 billion.

Success with Wow.com can go a long way for shareholders. AOL may have its shortcomings, but its ability to reach a wide audience and years of selling targeted ads against its page views will serve it well in this "coming soon" venture.

2. Sirius gains
Shares of Sirius XM Radio (Nasdaq: SIRI  ) hit a two-year high this week, fueled by last Friday's revised subscriber target. The satellite-radio provider now expects to close out the year with 20.1 million subscribers, well ahead of its earlier goal of 19.9 million accounts.

Lazard analyst Barton Crockett had no choice but to follow suit this week, bumping his own year-end estimate higher by 220,000 subscribers.

Crocket is reiterating his "buy" rating, naturally. The share price continues to inch higher, but the fundamentals are also jogging right along.

3. Zoom in on this
Plenty of retailers have been posting encouraging sales for the month of September, but Zumiez (Nasdaq: ZUMZ  ) deserves an extra heaping of praise.

The extreme sports apparel chain's sales spiked 23% during the five previous weeks, fueled by a 17% gain in store-level comps.

You can't judge a retailer by its comps. A chain can boost its sales by marking down its wares and making it up in volume -- killing profit margins along the way -- but that's not what's happening here at all. Zumiez notes that both sales and product margins clocked in better than expected during the month, forcing the company to revise its quarterly outlook.

Zumiez now expects its earnings per share to come in between $0.28 and $0.30 for its fiscal quarter that ends this month -- $0.03 a share higher than its earlier guidance.

4. NCR kicks kiosks into high gear
After watching Netflix (Nasdaq: NFLX  ) and Redbox broker deals with studios resulting in cheaper DVD prices in exchange for holding back on new releases for four weeks, NCR (NYSE: NCR  ) has joined the fray.

NCR has brokered a deal with Universal, agreeing to the 28-day release window in exchange for lower prices after that to stock its licensed Blockbuster Express kiosks.

I'm not a fan of these deals, but Netflix and Redbox have continued to gain in popularity despite the lack of availability of the hottest rentals.

I'm giving NCR a nod here because of a neat wrinkle in the deal. Studios don't want Netflix, Redbox, and Blockbuster Express to have access to their freshest releases because it devalues the full-priced rentals and actual retail sales that materialize during the initial DVD release. Well, NCR's deal allows for premium-priced rentals of new Universal flicks -- for more than the $1 a night fee that Redbox and Blockbuster Express currently charge. It will also test out the physical sale of new Universal DVDs through the kiosk.

Netflix and Redbox are creating a void during a new flick's hottest period of demand, and NCR may be able to light this candle at both ends.

5. Ready for prime time players
Amazon.com
(Nasdaq: AMZN  ) has conquered the e-tail market with its Prime membership model, but it's no longer alone. GSI Commerce's (Nasdaq: GSIC  ) ShopRunner is introducing a similar program that offers free two-day shipping at Prime's $79 a year price point.

It may seem stupid to take on Amazon, but ShopRunner's pool is actually a growing consortium of major retailers. The Sports Authority, Toys "R" Us, and GNC are some of the initial merchants stocking ShopRunner's virtual storefront with a whopping 5 million items. Future partners include AutoZone, RadioShack, and both Borders and Barnes & Noble.

It won't be easy to take on Amazon. Goldman Sachs estimates that there are as many as 3 million U.S. members in Amazon's Prime program, and they're unlikely to bolt or join two loyalty programs. However, if anyone stands a chance to take on Amazon's stickiness with a program that encourages repeat purchases, this is as sound a strategy as I've seen -- as long as GSI and its partners can stomach the subsidized fulfillment.

The holidays just got a whole lot more interesting.  

Amazon.com and Netflix are Motley Fool Stock Advisor recommendations. Zumiez is a Motley Fool Hidden Gems choice. Try any of our Foolish newsletter services free for 30 days.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Longtime Fool contributor Rick Munarriz is an optimist at every turn. He does not own shares in any of the stocks in this story, except for Netflix. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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  • Report this Comment On October 09, 2010, at 10:15 PM, gettingit wrote:

    Rick, just thinking back to when SIRI was at .50 and how you were bashing it-no one was more vocal then you. Your daily comments kept the stock down and you were the number contributor to its negative comments. Even when it reached $1.00, you would publish more articles about Pandora and that the SIRI business model is outdated and flawed. Today, almost every reputable analyst in this space thinks SIRI will go to at least $1.50. Is there any accountability at MF?

  • Report this Comment On October 13, 2010, at 12:58 PM, MaxPower13 wrote:

    Wow, Rick, congratulations! I had no idea you were so powerful.

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