By Charles Mizrahi, Founder, Alpha Investor Dear American Investor, You either have it or you don’t.
Those who have it make it look easy — like pulling a hair from a glass of milk.
Others thought they had it, but didn’t. And it destroyed their businesses.
In fact, there are only a handful of businesses that have it and know how to maximize it.
One more thing… Warren Buffett said that if you have it: “You've got a very good business.”
“It” is pricing power.
Today, I want to share a company with pricing power and how it works. Once I do, you’ll quickly see why it’s a great business… 3 a.m. Binge-Watching I love Netflix. Yes, I have other streaming services such as Hulu, HBO and Peacock.
But they can’t hold a candle to Netflix. Its algorithms have suggested some of the best movies and shows based on my past watching experiences…
I’ve spent many nights staying up until 3 a.m., binge-watching Ozark (37 episodes).
My wife and I are planning a trip to France after getting hooked on Emily in Paris (20 episodes).
And I talked with an Irish accent for a month after I binged watched Peaky Blinders (30 episodes).
So, one of the best values out there is my premium subscription plan for $19.99 a month.
Last month, when it raised the subscription fee by around $1, I didn’t flinch. In fact, I’d gladly pay an extra $10 per month for the zillions of titles I can watch on demand.
But by raising the fee just $1 per month, Netflix projects it’ll increase revenue by $1.3 billion per year.
That’s pricing power in a nutshell. It’s a business’ ability to raise prices without reducing demand for its products…
Thanks to a new battery technology, electric vehicles (EVs) may cost the same as gas-powered cars — by next year … and one company that pioneered this new technology could offer the investment of a lifetime. It has already attracted seven billionaire investors… The technology is protected by 200 patents… It is expected to trigger a 1,500% surge in EV sales over the next four years. See if this stock is a good fit for your portfolio.
When Price Is No Issue Plenty of companies have to work their tails off to increase their prices and still maintain demand.
These are the kinds of companies you want to stay away from. They’re a dime a dozen, and their stocks are usually overpriced.
But at Alpha Investor, we look for great businesses with pricing power. And as soon as Mr. Market puts these stocks on sale, we’re first in line to buy them.
Some of these companies include Arista Networks Inc. (NYSE: ANET), FedEx Corporation (NYSE: FDX) and The Coca-Cola Company (NYSE: KO).
Their products are in such great demand that customers are standing in line to get them. Many of them really need the product, so price is no issue.
Now, these companies are currently trading above my recommended buy-up-to prices today. So, they’re not bargains you can take advantage of right now.
But they’re great examples of companies that can continue to hike up their prices and still increase their bottom lines.
I only add businesses like this to the Alpha Investor portfolio. And more new opportunities will be coming soon.
And to be one of the first to hear about them, you’ll want to make sure you’re a part of the Alpha Investor family.
If you already are, I’m glad to hear it! Send me and my team an email at RealTalk@BanyanHill.com and let us know what you love about being a member so far.
And if you aren’t part of the family yet, it’s never too late to join us. Just click here for all the details.
Regards,
Charles Mizrahi
Founder, Alpha Investor
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