Daily Stock Market Equity and Options Trading Commentary

To get a better understanding of the option ideas expressed in this blog, buy my ebook today!

Thursday, March 5, 2009

Who Knew it was McDonald's?

Recently when I have been walking into many supermarkets and driving by gas stations I have noticed these red boxes. Inside these red boxes are rental DVDs for $1 a day. Why didn't I think of this genius idea?! Anyway you're probably asking yourself right now; what does this have to do with McDonald's? Well I've been wondering if these guys were a publicly traded company for some time, and today I finally had some time to do some research on them. The name of the company is Coinstar and I called them and wanted some investor information and they gave me their ticker symbol which is CSTR. Each of the rental boxes is owned by them and they give a commission to the store or chain that has it on premises. During recessions the entertainment industry usually does very well (Internet, movies, video games etc...). People are cutting budgets as usual in this recession, and a night of entertainment for $1 is a bargain! Movie giants such as Blockbuster may be in deep trouble as well giving these Red Boxes less competition.

Well I still haven't answered the question what about McDonald's?! Here is some information taken directly from the Coinstar website:

Nov. 17, 2005--Coinstar, Inc. (Nasdaq:CSTR) today announced an agreement with McDonald's Ventures, LLC, a wholly-owned subsidiary of McDonald's Corporation (NYSE:MCD), to invest in Redbox Automated Retail, LLC. Coinstar will invest $20 million in cash and will own a 47.3 percent share in Redbox. Redbox is the leading renter of DVDs through self-service kiosks with about 800 locations in the United States, including McDonald's restaurants and supermarket locations. The Redbox business has been in operation since 2002 and currently is a majority-owned subsidiary of McDonald's Ventures, LLC.

Therefore you have the answer, McDonald's has a nice hand in these Red Boxes as well as CSTR. So if you think these Red Boxes are a great idea you may want to invest in CSTR or MCD, either one has ties to these Red Boxes. The gambler in me wants to bet on CSTR, and the conservative in me wants me to pick up some MCD. I think if these Red Boxes continue to have strong growth like the past, it is a great buy at these levels ($25 range). Since the article above (Nov. 2005) Red Box has added 8200 kiosks nationwide and they expect to double that number by 2012! That's some aggressive growth!

Bookmark and Share
Sphere: Related Content


Hottest Blog Posts of All Time