Dow Jones 10,402.35 (Up) week ending 2/19
Wall street is littered with companies that have burst on to the scene providing movies and video content and game cartridges. There is probably an imprinted chart pattern out there somewhere that they all repeat. A growth pattern spurt and sudden rise in the price in the stock; then a rise up to a stock price with too much expectation built in which is unsustainable. Later, a sudden precipitous fall from grace and a never ending downdraft in the stock price. Look familiar Blockbuster??
The next up & coming "American Idol" star in this area is CoinStar(Symbol CSTR) with their REDBOX DVD and game cartridge rental machine. As of 8/13/09 they had rented their half Billionth DVD. On New Years Eve they rented 2 Million DVDs. So much for Dick Clark and Ryan Seacrest. I should do my blog on Tuesday, because I would have saved you some money, the stock was up 6% this week. I would say for the one year investor you are still ok to buy it here. 5 years sales growth has been 27.95%. As noted in the shooting star title these are trading stocks. You need to know when to exit ahead of time.
The reigning superstar of this area is of course Netflix (Symbol NFLX). It is pegged right now at a PE of 26, curiously a number very close to that Coinstar 28% growth rate.
The 12 month Total Return on the stock is 83.9%. Return on Equity (ROE) of 42.10%. Things look generally good. But 5 analysts have strong sell recommendations on the stock. "Chicken Little, the sky is falling"! Maybe they have already studied the aforementioned shooting star pattern. Or they have an overwhelming fear of Comcast,Time Warner,Amazon & Tivo, Apple I-Tunes, Game-Stop and a million other ways to deliver this content to you, including free DVDs being lent at your local library.
All I'm saying is, you can do a little trading here. There seems to be a big enough pie in this video and game content area to divide up with everyone.
I will also make a prediction here that the hockey team of the Russian Federation will win the Winter Olympic Gold. Sorry, Canada, Sweden & USA, I need to call them like I see them.
So where you gettin' your movie today?