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I love companies and business models with safe revenue streams. When these companies also achieve extremely reliable growth year in and year out, I’m usually on board.
One of the best business models for achieving this security is a subscription business. Companies with thousands of regular subscribers enjoy very reliable cash flows from a wide customer base. That can mean they are great investments.
Imagine you own a business with no physical inventory. You have no physical supply chain, delivery or warehouse costs.
Your business can fit a nearly infinite amount of product in the palm of your hand. And it can sell this product with almost no diminishing return on each additional unit sold. In fact, with each unit sold, your profit margin goes up.
That’s what a subscription business looks like. And because of these reasons, the quality ones tend to be good investments for buy-and-hold investors.
Many subscription-based companies are in the business of aggregating and selling information. In this increasingly complex and digital world, there is a constant flood of new information being created. That has been great for these types of businesses.
But information alone isn’t enough. We’ve all fought the struggle to cut through all the useless data out there to get to the nuggets that are actually valuable. Business managers face the same challenge.
Knowing how to collect, process, interpret and eventually act on the right data is where competitive advantages can be attained. And these are the subscription businesses you want to invest in.
Consider this simple theoretical oil-and-gas-related example to illustrate exactly why.
Exxon Mobil (NYSE:XOM) is considering buying rights to two exploration blocks in Tanzania in an area where it doesn’t have any prior work experience. Before doing so, it must assess the political risk, government royalty and tax structure, access to labor and shipping rates and routes. It also wants to know prior seismic and well drilling data to make sure it’s getting good property.
Gathering this information piecemeal isn’t efficient; what Exxon needs is an information database through which managers can quickly gather, analyze and share all the relevant information. Then they can reach an investment decision.
Only one company in the world has this data. And right now I’m recommending this very specialized subscription-based consulting company to Top Stock Insights subscribers.
On Thursday I’ll discuss this company in more detail. It’s an oil data services business that owns data on 90% of the world’s oil wells. The immense value of this company’s product means it’s on the “must buy” list for oil companies throughout the world.
The company was one of my top selections for steady growth in 2014, and we’ve held it in the Top Stock Insights growth portfolio since November 2013. We’re up 22% so far, and I believe we’ll be up 50% by the end of this year. I’ll give you the company’s name and details on Thursday. Stay tuned . . .
The One Company You’ve Never Heard of – But Smartphones Couldn’t Exist Without
Four months from now Apple will be releasing the most technologically advanced phone on the planet. And cautious estimates have them selling 200 million of them. While we love Apple (it’s in our 100k portfolio) we’re recommending a much less known company today…a company no one is talking about. A company that provides the technology, without which, smartphones couldn’t exist. It’s the company reaping massive profits each time a new Apple (or Samsung) smartphone is activated. In fact, as mobile data usage explodes in the year ahead, its stock is set to soar! Shares are already on the move. So, before this stock moves any higher, read our latest report for all the details: Click here for the full story.