There is no better way to open up a new week than finding new stocks to look at and buy for your portfolio. Let’s have a look at two new players I want you to get to know:
First up we have Coinstar (NASDAQ:CSTR) operator of popular coin-counting and Redbox DVD-rental kiosks. This company is all about automated retail—delivering services and products directly to consumers via self-service, interactive kiosks.
The company’s two leading brands, Coinstar coin counting and Redbox DVD rental, are located in about 55,000 locations around the world, mostly in supermarkets, drug stores, banks and convenience stores.
This is an unbelievably simple business that makes you want to slap your forehead for not thinking of it yourself.
The company’s movie-rental business makes up about 90% of its revenues, as Coinstar turned Redbox into a household name after Blockbuster and movie rental stores crashed.
In addition, while Coinstar’s DVD business grows, rival Netflix (NASDAQ:NFLX) has seen subscribers to its DVD-by-mail service drop in recent quarters after its public relations disaster over price increases and a plan to separate its mail and streaming services. So no surprise that CSTR has reported strong revenue and earnings growth over the past five years.
In its latest quarterly report, the company announced that sales rose 34% to $568.2 million compared with $424.1 million in the same quarter a year ago. During the same period, the company’s earnings from continuing operations rose 258.7% to $53.7 million or $1.65 per share compared with $14.8 million or 46 cents per share year-on-year.
Looking forward, Coinstar provided second-quarter sales guidance of $525 million to $550 million and operating earnings guidance of $1.09 per share to $1.24 per share.
And a few months ago, Coinstar announced plans to buy NCR‘s (NYSE:NCR) DVD business for as much as $100 million. The acquisition would give the company an additional 10,000 vending machine locations, along with software and services.
Plus, CSTR agreed to join with Verizon (NYSE:VZ) in a joint venture that gives the company a foothold in the fast-growing video-streaming field, along with its industry-leading kiosk business.
Overall, CSTR shares are a strong buy below $70.
Our second new buy is Spectrum Pharmaceuticals (NASDAQ:SPPI), a pharmaceutical company with a specialty: oncology, the treatment of cancer. The company currently has two cancer treatments on the market, Fusilev, a treatment for advanced colon cancer, and Zevalin, a treatment for a type of lymphoma.
Last year, sales of Fusilev grew more than fourfold to $153 million, though that growth is expected to slow this year as a cheaper generic alternative becomes more readily available. In addition, the removal of a requirement for a pre-treatment scan late last year may help Spectrum boost Zevalin sales.
The company was able to post strong growth in the first quarter. Sales rose 37.4% to $59.9 million compared with $43.6 million in the same quarter a year ago. During the same period, the company’s earning rose 208.7% to $46.5 million or 71 cents per share compared with $12.8 million or 23 cents per share. The analyst community was expecting sales of $56.9 million and earnings of 27 cents per share, so the company posted a 5.3% sales surprise and a whopping 163% earnings surprise!
But what really excites me about this company is what it has in its pipeline—more than10 drugs in either late-stage development or development including Belinostat, another lymphoma treatment, and Ozarelix, a treatment of prostate cancer. This is a mid-size biotechnology company that is about to experience blowout growth. It is already at the top of the industry in terms of return on equity and revenue growth, and I’m excited to see where this agile company will take us.
Add SPPI shares below $12.
