| The Penny Sleuth Features: Penny Stocks, Options and High-Growth Opportunities! |  |      | Editor’s Note: Today’s article comes from Greg Guenther, editor of Bulletin Board Elite, Agora Financial’s most exclusive research service. If you want in on his next under-the-radar OTC penny stock pick tomorrow morning, you have to respond here immediately… Your last chance to get six free months of his research ends tonight at midnight!
Profit from the Rise of the Machines
By Greg Guenthner
October 29, 2009
Weak and strong companies alike are forced to adapt or die during a recession. Usually, this means finding new and creative ways to save money and keep the lights on.
Unfortunately, most businesses resort to lay-offs during tough times. But in service-oriented business like retail, banking and entertainment, someone still needs to provide customer service and support.
That’s where the machines come in…
Retail, hospitality and health care businesses spent $2.8 billion on self-service technology last year, according to VDC Research Group. This spending is expected to grow 15% annually over the next four years.
It’s no surprise that businesses would turn to automated help during tough times. Transactions made using an automated system such as a ticket booth or automated teller machine cost a tenth of what the very same transaction would cost if it involved a human employee, according to The Economist.
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Small-cap standout Coinstar Inc. (NASDAQ: CSTR) is an obvious choice in this sector. If you’ve set foot inside a grocery store or fast food restaurant in the past few years, you’ve probably seen one of Coinstar’s machines.
The company’s namesake machine automatically converts your spare change into cash or gift certificates to various popular stores, keeping several cents for every dollar in the transaction. But the company also owns Redbox, the self-service movie rental kiosk found in fast-food restaurants and other retail locations.
Coinstar’s purchase of the Redbox brand fits in beautifully with its business model. After all, the kiosk rental market looks very strong right now. It’s a niche in the automated services industry that has the ability to perform very well during almost any economic climate.
DVD sales are down double-digits this year as consumers continue to tighten spending habits. But rental revenue is up more than 8% across the industry. After all, spending $1 a night on a DVD rental from a kiosk is an easy choice compared with what a consumer would spend buying or going to a theater.
Coinstar enjoys fat margins and growing profitability because it can employ a lean technical support staff. Fewer salaries, and in these days of rocketing insurance costs, fewer benefit expenses can go a long way.
Providing a meaningful, convenient machine-based service can also strengthen customer loyalty. An impressive 85% of customers prefer brands that offer self-service technology, according to The Economist. The last thing anyone wants to do is wait in a long line. Fast, reliable kiosk service isn’t just a way to save money — it’s a better way to cultivate satisfied customers.
Best,
Greg Guenthner
P.S.: I recently recommended an over-the-counter stock that’s in the midst of a multiyear effort to ramp up profits from its core self-service kiosk business and expand into other self-service niches. You can get this ticker, along with access to my entire penny stock portfolio right here…
But you need to hurry. My publisher’s special offer ends tonight at midnight.
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