June 26, 2012
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 (Nasdaq: CSTR ) , and its Redbox DVD rental system, has changed. Austin believes Coinstar is undervalued after looking at its relationship with Starbucks (Nasdaq: SBUX ) , Verizon (NYSE: VZ ) , and eBay (Nasdaq: 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.