Okay, I must admit, I am really proud of this one… It first caught my attention last year when I started noticing people frequently queued up behind those red giant kiosks at grocery stores. Being a frequent movie watcher myself, I decided to give it a shot. The whole thing was amazingly simple (& cheap….$1 rental). I just chose a movie from the menu, swiped my card & it vended out the dvd in an instant. The receipt & later a reminder for return was automatically emailed to me. As if I wasn’t impressed enough already, they emailed me a free coupon just to try the service again.
The Redbox service definitely had attention now. The idea was novel & extremely convenient, & the price was more than reasonable. Since I am a huge fan of Peter Lynch’s methodology as well (observing consumer trends to find stocks) I decided to look up the company. At first I couldn’t find a whole lot more. Their website didn’t have any stock information, so I just assumed they were a startup and gave up the idea. I guess the long queues behind the Redbox kiosks eventually motivated me to dig deeper. I mean this was my FIRST golden opportunity to pick a stock which could potentially be a winner.
Thanks to Google! I learnt that Coinstar was one of the main stake holders in the company. The company looked just about okay at first. They specialize in 4th wall products at major grocery stores. One thing I didn’t like about them was that the stock had sort of been stagnant for most part of their 10-11 years history as a public company. But then as I read more, I realized that Coinstar had finalized deal with Walmart for installing about 2500 - 3000 coin counting & Redbox kiosks nationwide by 2010 or so (See here: http://www.forbes.com/feeds/afx/2008/02/11/afx4637648.html). Ofcourse, that meant significant increase in revenues gradually. I looked up at Yahoo finance, & only 4 analysts were following it, & there were no recent recommendations on the stock. (See here: http://finance.yahoo.com/q/ao?s=CSTR). I got more excited because the market was definitely missing this one, & loaded up my portfolio after monitoring the stock price for few days.
Inspired by Jim Cramer’s book (Sane Investing in an Insane world), I listened to some earning call recordings & it was amazing to see how Coinstar was beating estimates quarter after quarter. The stock price in accordance kept moving up & gradually reached a 52 week high of 38 dollars. Coinstar also increased its stake in Redbox & announced that it was planning an IPO for Redbox in mid 2008. However, the market conditions deteriorated very rapidly, and I guess the IPO plan just sort of disappeared. Even though the company was seeing strong quarters, the stock price came down from 38 to 15 in a matter of a few weeks along with the broader market. (Could be related to the death of the chairman as well, I am not sure..). Anyway, I had no intention of letting this stock go, but at the same time, I missed the window to buy some more of it. That would have been awesome!
Now, as the market is recovering again, CSTR has recovered very sharply, & is flirting again with the 52 week highs. I am assuming that the recent rise is in anticipation of the 1Q result which the company will announce on May 7th. I read Jim Cramer’s comments that the stock was rising in anticipation of a buyout (See here: http://www.thestreet.com/story/10492906/1/mad-money-lightning-round-honeywells-a-steal.html?cm_ven=GOOGLEN), but I couldn’t really find anything concrete to support that.
Recently, Netflix, another company which is seeing unprecedented growth in these uncertain times acknowledged the threat to its business from DVD kiosks. Quite surprising! (See here: http://www.afterdawn.com/news/archive/17790.cfm)
Strategy: Till last week, I would have really recommended this stock, but since it has risen almost 20% since then, I am not sure if this is the perfect time to buy it. I’ll recommend may be buying a minority stake now and then waiting for a couple of weeks before buying more. The 1Q result should most probably provide a little more lift to the price, but I don’t know if the stock will stay at those highs for very long. I still think this is a solid company, with a great business model & growing revenue. It’s just that the sharp rise in the last week makes me feel like the opportunity window has been missed, at least for now. I also looked at the MACD graph. Though right now it’s in the positive, it’s sort of hard to predict if it’ll stay that way for long. I guess for me the MACD graphs are just more of a way to understand why the prices went up or down in the past… they aren’t really very helpful (at least for me) in predicting future price movements.
Price Target by end of 2009: 45-50.
HAPPY INVESTING!
DISCLAIMER: The author currently holds stocks of CSTR, however this can change at any moment without notice. This is merely a stock analysis & is prone to author’s views & expectations of the company. PLEASE research the company extensively before buying or selling the stock! The author should not be held responsible for any gains/losses suffered.
Links/ References:
http://www.forbes.com/feeds/afx/2008/02/11/afx4637648.html
http://finance.yahoo.com/q/ao?s=CSTR
http://www.thestreet.com/story/10492906/1/mad-money-lightning-round-honeywells-a-steal.html?cm_ven=GOOGLEN
http://www.afterdawn.com/news/archive/17790.cfm
I have been following the stock market pretty closely for about a year & a half now. When I entered the market, the stocks were in recovery mode with the hope that the credit crises won’t be as bad, & that Government’s rate cuts & other steps will usher in a quick recovery. However, the hope quickly faded away, & the lower interest rate gave rise to inflation, & back breaking oil prices. Each day, I used to watch oil prices (& oil stocks like SGY) climb up to new highs, & rest of the market simply falter.
Thanks to the sky high oil prices, the 150 billion dollar stimulus plan pretty much came & went unnoticed. Combined with all this, & the rising unemployment, consumers sharply pulled back & suddenly inflation fears changed to deflation fears (& for good reasons..). At that time, while most of the retail stores were reporting a sharp drop in sales, companies like Walmart & Mc Donalds were reporting a modest rise in same store sales. Consequently, while rest of the stock market came tumbling down, stocks like Walmart & Mc Donalds were very close to their 52 week high. Then as the unemployment rose, more & more people decided to refresh their skill sets & as a result stocks like Apollo Group & Devry University rose to new highs!
Now, this is a really eye opening experience for me…As the fear of a global pandemic is rising, airline & tourism stocks are taking a hit while some of the biotech stocks (even obscure stocks, with not much history) are going through the roof! (See here: http://money.cnn.com/2009/04/28/markets/thebuzz/?postversion=2009042813). Stocks like Roche & Glaxo, the pharmaceutical companies whose products are being used to treat the disease (for now atleast) are doing very well too. Several countries are piling up the inventories for these medicines, & that’s going to help these stocks in the weeks to come.
I guess what I am really trying to say here is more of a self realization than anything else. No matter what the economic season is, & how bad the market is doing; there will always be one sector or the other that’s seeing unprecedented growth! The trick lies in identifying those sectors, investing at the right time & then getting out while you are in the green. Ofcourse, this strategy requires a lot of time & attention, & a fair knowledge of the sectors involved. For now, I’ll stay with the sectors that I think I understand, but nevertheless, these economic trends are fairly interesting to observe!
Reference:
http://www.guardian.co.uk/world/2009/apr/30/swine-flu-drugs-glaxosmithkline-roche http://money.cnn.com/2009/04/28/markets/thebuzz/?postversion=2009042813 www.greekshares.com/decision.php
Ever since Iphone came out in Summer 2007, each & every device that can be barely filed under ‘phone’ category has been compared with it in one way or the other. While there is nothing wrong with healthy competition, it just gets overwhelming at times when all the phones right from the likes of Moto Q, blackberry pearl to phones like G1, & Storm are termed at the next ‘Iphone killer’. I am not at all saying these are bad phones. I have used & tested most of them at some point or the other, & almost all of them are excellent phones. It’s just weird to see every smart phone & touch-screen phone that comes out being termed as the next Iphone killer. Anyway, I digress, this is really not what I want to discuss in detail. I just want to take a tally of how some of the phones that were termed as the Iphone killers have performed in the market. I’ll start with HTC touch, the first touch screen device to be touted as Iphone killer that came out in October 2007 (with Sprint in US).
·HTC Touch (See here: http://news.cnet.com/1606-2-6189822.html)
After AT&T launched the Iphone in summer, Sprint came out with the first Iphone killer a few months later. Verizon later launched its very own version of HTC touch. While the actual sales numbers are hard to predict, I feel safe in saying that the number will be south of 1 million, atleast as far as US is concerned.
The phone, however has impressive sales numbers if you consider the worldwide territory ( See: http://www.intomobile.com/2007/11/15/htc-ships-1-million-htc-touch-handsets-in-6-months.html)
A great phone? SURE. Iphone killer? No way…Enough said!
Samsung (F700) & LG( Prada KF900) were quick too in coming up with several touch screen phones, but with limited carrier support, I am not sure if they met a lot of success. (Atleast Stateside)
·Samsung Instinct (See the clear comparison: http://www.instinctthephone.com/)
Oh boy! The buzz that this phone created when it was announced at CTIA in 2008! It won the CTIA phone of the year award, & blogs & news sites termed it as the next Iphone killer. Don’t get me wrong, it actually is a decent phone. I am using it right now, & for 129 bucks it’s great.
While the sales numbers haven’t been made public…a few hundred thousand at the very max, right?
This one didn’t manage to kill the Iphone as well.
Between Instinct & G1, a lot of other touch phones / smart phones came, but I am just going to talk about the main ones.
· T-Mobile G1 (See here: http://www.wired.com/gadgetlab/2008/09/showdown-htc-t)
The first Android phone.. It was announced after months & months of speculation on how Google was going to enter the handset world. It again generated a lot of buzz, & I used the first opportunity I could find to play with the phone @ a T-mobile store. Definitely a cool phone.
T-mobile recently announced that G1 crossed the 1 million mark. Very impressive I must say. But it too falls way short of Iphone sales number.
·Blackberry Storm ( See their not so subtle ad, which blackberry never ‘officially’ released: http://www.youtube.com/watch?v=xfjS6c9tBls)
Again, this phone created a lot of buzz, first touch screen phone by blackberry…first touch screen phone with AWESOME email support etc. To be honest, their ‘tactile’ interface is so simple, & yet so cool…kind of those ‘why didn’t I think of it’ moments. Again the latest numbers aren’t available, may be a little more than a million? No Iphone killer here either.
Now, let’s see some Iphone sales numbers. Apple of-course makes sure that it releases the sales figures in each & every keynote (which is very nice for investors!). Apple sold more than 250,000 phones within the first 30 hours of the launch in 2007. It reached the 1 million mark in a matter of few weeks. When Iphone 3G was launched last year, it reached the 1 million mark within the first 3 days! (To be fair, I think this included several other countries..). Apple has sold more than 17 million Iphones till date, putting it way ahead of all the other ‘Iphone killers’ combined! & the most interesting part is, that even after 2 years of release, the numbers aren’t slowing down at all. AT&T is still seeing amazingly strong numbers quarter after quarter, thanks in large part to Iphone.
Ok, enough of praise for Iphone. Now the next Iphone killer is going to be Palm Pre. While it certainly has a lot of promising features, only time will tell how it does in the market!
I left out many other great phones like Nokia N95, Nokia 5800 etc, Sony Ericsson Xperia etc. because with limited/no carrier support, I am not sure how they stack up in the US market.
DISCLAIMER: The author is a HUGE fan of apple, & anything you say against it can be & will be used against you in the Icourt :D
Sources:
http://www.engadget.com/2009/01/27/verizon-touts-1-million-blackberry-storms-sold-to-date/ http://en.wikipedia.org/wiki/IPhone http://www.gsmarena.com/lg-phones-20.php
Cloud computing has quickly become a well known celebrity in the world of budding next generation technologies. The technology is certainly very exciting, & promises to open a whole new world of opportunities. I am just writing this post to discuss some consumer centric ideas which to me sound enticing.
The whole idea is actually not all that complicated. In very simple terms, it just refers to accessing data, software applications & computing resources through the network (or the CLOUD..) Now, just imagine the possibilities that will open up once you combine the high speed 4G network & cloud computing! All your files, music, videos & pictures will be at your fingertips no matter which device you use, & no matter which part of the world you are in (As long as you have access to the network). I guess this is already true for photos through services like picasa, but what I am saying has much broader application. Imagine, never having to worry about a lost Ipod / flash drive, damaged hard disk, & broken computer! Imagine, your ‘cloud connected’ car playing the same playlist that you were listening to at home the night before. The DVR could directly record your favorite shows on the network, & you could literally watch them in HD on any portable device while running on treadmill @gym 100s of miles away….
Ease of access is just one aspect of cloud computing. The technology has the potential to revolutionize each & every electronic device, whether it is a smartphone, or a desktop computer. The devices as they exist today require their own ‘brain’ to process the input/output functions & numerous other computations. If the ‘brain’ of these devices is shifted to the cloud, imagine what it’ll do to the devices. The laptop for example will just have a screen, keyboard & mouse, & minimal hardware to interact with the network. The hard-disk, the processor, & may be even the cooling fan would disappear. It will weigh less than a pound, cost 100 dollars & switch-on in an instant & still be a hundred times faster as compared to the computers today.
To get an idea of the increased speed & efficiency, just try searching for an email in MS Outlook (with the indexing feature turned off) & then compare it with the time it takes to search for the same email using a web client…the results will be obvious.
While all this sounds good & charming, it raises some interesting questions as well. What happens if suddenly the network goes down, or you end up in a place where you simply don’t have internet access …? One moment you are flying @ the speed of light, & then suddenly you crash in to the stone age…that’s what it will be like! Success of cloud computing will essentially be dependent on presence of high speed reliable networks. Thanks to my work at Sprint, I have seen one such network in action..the Wimax network. I am sure the LTE network will be the same as well.
I am very excited about cloud computing. Are you?
DISCLAIMER: This post contains forward looking statements about technologies that are still in different stages of development. While these ideas appeal to the common sense at the moment, history has plenty of examples that show just how wrong some of these statements turn out to be ( See here: http://tech.msn.com/news/articlepcw.aspx?cp-documentid=16829041) . My suggestion is, don’t put a leash on your imagination, develop whatever appeals to reason & then just let demand & supply rule the day!
Sources:
http://www.hyperic.com/blog/wp-content/uploads/2008/12/question-cloud.jpg http://www.youtube.com/watch?v=hplXnFUlPmg
Tata Motors has been basking in international limelight for some time now, & mostly for good reasons. In June 2008, Tata Motors acquired Jaguar & Land Rover brands from Ford. Continuing ahead with full speed, Tata showcased the world’s cheapest car last year, Tata Nano, costing a mere $2000 for the base model. Bookings for Nano started in April this year, & while the official numbers are still due, many news sites are reporting that an estimated of 1 million cars have already been booked! (Assuming the 1 million number, the applications itself would have brought in about six million dollars!) Before I continue, let me first iterate that Tata Motors is by no means a new guy on the block. It has been in business since 1945, & is one of the leading manufacturers of commercial vehicles in India. Tata Motors has met an amazing success in the passenger vehicle landscape as well, with hits like Sumo, Safari & Indica to name a few. With the launch of Nano in India, & Electric Indica in parts of Europe, & India in the next year or so, it is not hard to anticipate which way the revenues will be heading. To add icing on cake, prices of commodities like steel & aluminum are down, helping Tata with maintain a healthy profit margin.
The stock has recovered sharply from its 52 week low and has more than doubled in the last two months itself! While that might feel like a missed opportunity, let me point out that it is still way below its 52 week high. With all the new exciting developments & a global economic recovery (which seems to be underway…HOPEFULLY it’ll stay that way), I feel positive about company’s prospects.
While I strongly recommend this stock, there is some mixed news as well. When Tata acquired Jaguar & Land Rover last year, it assumed $3 billion in loans (which is almost as much as its market cap considering recent stock price). The good news is that it has already paid $1 billion back to the lenders. The bad news is that the credit crunch is affecting company’s ability to refinance the $2 billion dollar loan, which is due soon. Tata recently reached out to public, & raised around $400 million dollars which should help somewhat.
A look at financial statements & ratios reassures me. The P/E ratio is comparatively low, the dividend yield is great! (4.65%), & the cash flow seems to be OK. The company does have a lot of loans, but that can be explained by its aggressive expansion & acquisitions worldwide. The ‘Net Receivables’ did raise my eyebrows for a minute but the growing number seems to be consistent with the overall revenue growth. Though, I don’t follow the technical analysis often, the MACD graph suggests that financial institutions are pouring money in to the stock, which is always a good sign!
In the coming week, the stock might go either way when Tata releases Nano booking numbers. I am inclined to believe the 1 million figure, & if Tata meets that, it should boost investors’ sentiments. While I have nothing against short term trading (Any legitimate profit is good profit!), I would certainly recommend this stock for long term.
Recommended Strategy : Buy majority ( or at least half) stake now, If the market punishes the stock around June when the $2 billion loan is coming due, scoop up some more!
Price Target: $20 by end of 2009
HAPPY INVESTING!
DISCLAIMER: The author currently does not own any stocks of TTM, however this can change at any moment without notice. This is merely a stock analysis & is prone to author’s views & expectations of the company. PLEASE research the company extensively before buying or selling the stock! The author should not be held responsible for any gains/losses suffered.
Links:
http://www.topnews.in/tata-nano-bookings-close-around-one-million-cars-booked-2157390
http://www.meps.co.uk/allproducts%20steel%20price.htm
http://www.bloomberg.com/apps/news?pid=20601091&sid=aLEWE.wB3y7Q&refer=india
http://en.wikipedia.org/wiki/Tata_Motors
http://www.google.com/finance?q=NYSE:TM
http://finance.yahoo.com/q/bs?s=TTM&annual
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