Short Interest: 38%
Analyst Predicted Upside: 15%
Coinstar (CSTR) — maker of those RedBox kiosks that spit out movie rentals — is sitting in the red during the past 12 months but is outperforming the broader market year-to-date.
Lots of investors are expecting to see more red, though.
Just under 40% of the float was sold short as of June 14, and while that’s a decrease from the short interest back in April, it still makes for an eye-popping short ratio of 15 (in other words, shorts would need 15 days to close out all their positions). The reason for such pessimism: Revenue per Redbox kiosk — kiosks that make up around 90% of the company’s operating income and revenue — has been slipping in recent quarters.
Despite that, Northland Capital recently reiterated its “outperform” rating and upped its price target for CSTR, and Thomson’s consensus estimates still give the stock a projected upside of 15%.
That doesn’t seem unreasonable considering CSTR is trading for a mere 10 times forward earnings — less than expected annual five-year growth of 18% — and considering its high short ratio, the stock could be ripe for a squeeze.