It’s not often you come across a stock that can make more money if consumers cut back their spending.

#-ad_banner-#In times when the market feels treacherous, investors’ favorite stocks suddenly don’t feel so safe anymore. That’s when it may be easy to run in the direction of utilities, bonds or even cash.

But almost always there are companies that can continue to do well in a downturn. The trick is to find the ones that do not need a rising stock market and a growing economy to keep churning out profits.

It helps even more when that kind of company is also beaten down and under-loved.

Outerwall, Inc. (Nasdaq: OUTR), an automated retailer, is perhaps best known for its Redbox movie kiosks.

The company was dissed recently when it was included in a MarketWatch story headlined “15 Most Hated S&P 1500 Stocks In This Terrible Market.” Outerwall, as it turns out, is one of the most heavily shorted stocks around, according to FactSet.

The naysayers may be very wrong. For starters, Redbox, despite its low-tech business model, is simply a consumer bargain.

It costs between $1.20 and $1.50 per day to rent a Redbox movie — less than streaming services or on-demand plays that go for an industry average $4.99 each, or the monthly minimum from Netflix. If the US consumer decides to retrench on spending, then Redbox suddenly becomes an attractive alternative to the crowded video on demand space.

Not that Redbox is doing badly in the first place.

There are now 35,900 domestic Redbox kiosks and Outerwall operates foreign kiosks so far in Canada, the UK and Ireland. Further global expansion seems like an obvious strategy.

The company also has a big customer email collection effort, which we view as offering solid marketing potential for other products and services, as well as for revenue from third party marketers. Redbox sent out a whopping 590 million emails in Q2 alone.

Those other products and services look extremely attractive at this point.

Outerwall’s Coinstar kiosks are a proven winner. They contain machines that convert coins into dollars for a small fee — but those fees add up.  The Coinstar kiosks have processed more than $38 billion in change to date, with outstanding operating margins of 38.6%.

The company recently added a promising new twist to the Coinstar proposition — customers can now purchase gift cards as an alternative to cash for their change.

The company also believes an innovative automated retail product it is rolling out — the ecoATM — has special promise. This new kiosk product pays instant cash to customers for their old cell phones, tablets and MP3 players.

These ecoATMs are just the kind of product that could do well in a challenging economy. Outerwall expects to install 1,000 of the machines in malls, large grocery stores and mass merchant outlets by the end of 2014, with the potential for $100,000-to-$120,000 in annual revenues per kiosk.

Did I mention Outerwall is a profitable company? By nature of its business model as an automated retailer, the company does not need a sizeable work force since the kiosks are unmanned by clerks. Retail space requirements are also slim, given the kiosks’ size versus a traditional retail store space.

Annual revenue per employee at Outerwall is $803,370, not surprisingly, a healthy multiple to the $233,440 of the average specialty retailer.

Analysts are skeptical about Outerwall in part because they think its bricks-and-mortar retail model is so “yesterday.” The company also suffered last quarter from a weak slate of movie releases by Hollywood studios.

But Outerwall has a lowly price-to-earnings ratio of 8.01, which looks great against the industry average of 19.60. This makes OUTR a real value proposition in my estimation.

Outerwall also sports earnings per share growth on a trailing 12 month basis of 44.49% and its free cash flow is on the upswing — up to $36.8 million in Q2 2014 from $5.9 million in the year-ago period. Return on equity is 52.99%, against the industry average 19.41%.

In short, Outerwall has many of the attributes we look for in our GARP (growth at a reasonable price) investment philosophy. What’s not to like for the value seeker?

Risks To Consider: Outerwall could potentially stumble with its ecoATM rollout, an important initiative for the company’s future. Studios could retrench on their release slate availability for Redbox and the movies themselves could be duds, producing fewer rentals.

Action to Take –> Outerwall is expected to report Q3 revenues on October 30. Watch the share price carefully, if it begins to accelerate ahead of earnings, then take action accordingly.

Another method of making smart investments amid volatile markets is to look for companies with deep moats around their business and a history of beating the market. My colleague Dave Forest calls these stocks “Forever Stocks.” For more information about these world-dominating companies, click here.