Continuing along a line of reasoning I have presented before, this owner of the Redbox franchise is a popular purveyor of DVDs for $1 a night, Blu-rays for $1.50, at kiosks all over including at McDonalds restaurants, CVS stores (recently announced), Royal Farms (if you're in my area) or other convenience stores, and who knows where else soon.  It's the coke machine of the 21st century, rental movies via a swipe of your credit card.

The popular knock on this company is that it's no Netflix, because they don't have a foothold in streaming.  This is true, but that's okay, because plenty of people are happy to use a kiosk to pick out a DVD and take it home that night.  Many people don't have the kind of internet connections required to make streaming viable.  

Plus if you look at Netflix, the money required to get the latest and greatest movies over streaming mean that to make the numbers work, they might at some point have to offer a two-tiered approach to streaming: pay an extra $5 a month or so to get Saw 12 or Avatar: 5D or the latest Jude Law romantic comedy.  Because of that law from the 80s allowing companies to buy physical copies and rent them, it will remain more cost-efficient to rent physical copies in the foreseeable future.

Over the last month or so Coinstar's stock price has been on a bit of a roller coaster ride, but my gut tells me it's cheap here.  I will forego any options-expiration-tied gambles and just set my target for the end of 2010.  I don't doubt there will be bumps in the road, but this is a company where the perception of it is still on the way up.  And that has been my most reliable formula for success in the past.