Have you ever gone grocery shopping and used a self-serve checkout kiosk? They are slowly making their way into our daily lives and the financial gain felt from these machines will be substantial. Estimates suggest $5.8 billion will be spent on self-serve solutions by the year 2013 and the revenue generated by the retailers who have bought the technology is pegged at $1.3 trillion. Yes, that's a T, not a B.

The faster customers are able to pay for their purchases, the happier they'll be since waiting times in lines are minimized. It's not just about saving on labor costs, as cynics might point out. Plenty of companies are jumping on the bandwagon and there are several ways you can benefit as an investor.

Biggest Stock Scams

Zoom Systems
This is a San Francisco-based maker of self-serve kiosks that has partnered with firms like Rosetta Stone (NYSE:RST) and Apple (Nasdaq:AAPL) who use Zoom's machines to market their products in airports, malls and other high-traffic public places. Unfortunately, Zoom Systems is a private company. However, some of its partners include Motorola Ventures, the venture capital division of Motorola (NYSE:MOT), and Goldman Sachs (NYSE:GS).

While Motorola's had some large losses in recent years, its fourth quarter generated $794 million in free cash flow, up from $574 million in the third quarter. It's a back door investment but a potentially lucrative one.

Language instruction software-maker Rosetta Stone went public in April 2009. The 40% rise in its stock price on the first day of trading - from $18 to $25 - is likely to be most of the appreciation it will see for the next three years. Most IPOs gain just five additional percentage points from its aftermarket return over a three-year holding period. Well, we're not at the three-year mark but the stock price is currently trading below its IPO price. Pick up some stock when the price falls to $18.

The Golden Arches
(NYSE:MCD) originally conducted an 18-restaurant test in Europe using 50 self-serve kiosks made by Wincor Nixdorf, a German company and world leader in point-of-sale technology. Customers punch in their order, pay using a credit or debit card, receive a number and then pick it up at the counter when ready. Up to 25% of customers prefer this to ordering from a real person. Because of the test's success, McDonald's is rolling out the touch pads to 2,000 of its European stores.

There are two ways you can play this: 1) Buy McDonald's stock assuming it will lower costs while speeding up the ordering process, generating increased sales and profits; and 2) invest in the WisdomTree International Technology Sector ETF (NYSE:DBT), which owns Wincor Nixdorf among its 58 stock holdings. Sixteen analysts have a "Buy" or "Accumulate" rating on the company. (What's in an analyst report and what should you do with this information? Find out here Analyst Recommendations: Do Sell Ratings Exist?)

Video Rental Showdown
Redbox is the leader in self-serve DVD rentals. Owned by Reno-based Coinstar (Nasdaq:CSTR) since last February, it recently began testing video game rentals in two of its markets. For $2 a night, you can take home a game to play. The tests have been a huge success. Expect Redbox to offer this nationwide very soon. Given this news, I wonder if its stock should be trading near a 52-week low. It's something to consider.

As for Blockbuster (NYSE:BBI), Redbox's biggest competitor in self-serve kiosks, it would be worth looking first at NCR (NYSE:NCR) who still generates free cash despite having its best days being behind it.

The Bottom Line
As we continue to prefer and move towards automated service, keep an eye on the self-serve world. Things are going to get interesting. (For more related reading, refer to 12 Ways To Shop Smarter.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    Starbucks: Profiting One Cup at a Time (SBUX)

    Starbucks is everywhere. But is it a worthwhile business? Ask the shareholders who've made it one of the world's most successful companies.
  2. Stock Analysis

    How Medtronic Makes Money (MDT)

    Here's the story of an American medical device firm that covers almost every segment in medicine and recently moved to Ireland to pay less in taxes.
  3. Investing News

    Latest Labor Numbers: Good News for the Market?

    Some economic numbers are indicating that the labor market is outperforming the stock market. Should investors be bullish?
  4. Investing News

    Stocks with Big Dividend Yields: 'It's a Trap!'

    Should you seek high yielding-dividend stocks in the current investment environment?
  5. Investing News

    Should You Be Betting with Buffett Right Now?

    Following Warren Buffett's stock picks has historically been a good strategy. Is considering his biggest holdings in 2016 a good idea?
  6. Products and Investments

    Cash vs. Stocks: How to Decide Which is Best

    Is it better to keep your money in cash or is a down market a good time to buy stocks at a lower cost?
  7. Investing News

    Who Does Cheap Oil Benefit? See This Stock (DG)

    Cheap oil won't benefit most companies, but this retailer might buck that trend.
  8. Investing

    How to Ballast a Portfolio with Bonds

    If January and early February performance is any guide, there’s a new normal in financial markets today: Heightened volatility.
  9. Stock Analysis

    Performance Review: Emerging Markets Equities in 2015

    Find out why emerging markets struggled in 2015 and why a half-decade long trend of poor returns is proving optimistic growth investors wrong.
  10. Investing News

    Today's Sell-off: Are We in a Margin Liquidation?

    If we're in market liquidation, is it good news or bad news? That party depends on your timeframe.
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
Trading Center