If anecdotal evidence is anything to go by, the optical disc's days may be numbered:

  • Netflix (Nasdaq: NFLX) is referring to itself as "the world's leading Internet subscription service for enjoying movies and TV shows" as it emphasizes its streaming catalog over its original DVD rentals.
  • Apple (Nasdaq: AAPL) has opted out of optical discs for its MacBook Air line since its inception, but the latest update goes one step further. Apple is replacing its operating-system backup DVD with the same data on a USB stick.
  • Studios in general have been bellyaching over sluggish DVD sales.

Still, try telling that to Coinstar (Nasdaq: CSTR). The company behind the Redbox kiosks, which rent DVDs for a buck a night, delivered stellar growth last night.

Third-quarter revenue surged 42% to $380.2 million, as earnings nearly doubled to $0.66 a share. Analysts were only banking on a profit of $0.50 a share.

Redbox revenue climbed 54% to $305.5 million, or 80% of total revenue mix. One has to wonder why the company hasn't changed its name to Redbox already. Its namesake coin-collecting business grew a mere 7% to $74.7 million during the quarter.

If you didn't think that a company could expand on its margins and generate a 54% top-line boost by renting out discounted DVDs, think again. Redbox is growing nearly twice as fast as Netflix, which had a 31% top-line gain over the past year.

Why is Coinstar's stock as red-hot as its kiosks? The company raised its guidance for 2010, and initiated a 2011 view far ahead of where the pros are perched.

Coinstar targets earnings per share between $3 and $3.50 next year, on $1.8 billion to $1.95 billion in revenue. Wall Street had settled for earnings of $2.87 a share on $1.8 billion in revenue. Based on last night's close, Coinstar stock was fetching just 13 to 15 times next year's projected profitability. That's not too shabby, given Coinstar's growth, as long as DVDs don't go completely extinct over the next few years.

There will always be a cloud of obsolescence hanging over Redbox, especially as more Wi-Fi-backed homes stream movies over a growing range of home-theater appliances. That said, Redbox will not go without a fight. It promised to reveal a digital strategy this month. Last night's call didn't include the expected fireworks, though; Coinstar only pointed out that it will launch a Redbox-branded digital service through partners -- earlier rumored to be Wal-Mart (NYSE: WMT) or Amazon.com (Nasdaq: AMZN) -- next year.

Delays and dependence on digital partners won't help Redbox make up ground on Netflix. But as long as consumers continue to gravitate to marked-down discounted rentals -- and now video games in 4,500 kiosks, and $1.50 Blu-ray rentals -- Coinstar will continue to hold up nicely.

Would you rather own Coinstar or Netflix? Share your thoughts in the comment box below.

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Longtime Fool contributor Rick Munarriz has been a subscriber and shareholder in Netflix since 2002. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. 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 Fool has a disclosure policy.