Private Briefing's Bill Patalon has shown us quite a bit about finding the best stocks at great prices.
For instance, one of the things he looks for is high levels of "insider buying" (not insider trading), which is a very potent profit catalyst for stocks. After all, insiders sell their shares for all kinds of reasons, but they buy for one reason alone: They expect the stock to go straight up.
Another method Bill uses to bullseye shares, particularly when making a prescient "early" call, is the business model. A solid business model, especially from the get-go, almost always brings in solid revenue later.
Especially potent is the old "give 'em the razor, sell 'em the blades" model of locking in a juicy revenue stream.
It was perfected by King Camp Gillette in the early 20th century, and you know how it works: The durable razors can be had for cheap… but the disposable blades you need to stick on the business end are often three or four times more expensive, and most people need a steady supply.
That's expensive if you're a customer, but it ought to make investors' eyes light up.
It's an old, profitable technique, but it's actually becoming more widespread – and more profitable – as time goes on…
Guaranteed Profits Are the Best Kind
Microsoft Corp. (Nasdaq: MSFT), for instance, is a well-known tech company using the razor-and-blades model.
Tellingly, "Mr. Softy" no longer shares its numbers for the latest Xbox One gaming console, but it's thought to have moved 26 million units as of January 2017.
The gross profit on each? About 40 bucks. It's a virtual certainty that Microsoft ends up losing money on each console it sells… only to rake in profits on its grand strategy of using the console as a way to sell users on the "blades," the digital media subscriptions, games, apps, and other "must-have" services we all use today.
As Bill pointed out in his recent column "How an Age-Old Business Model Will Drive This Tech Stock to New Highs," Keurig Green Mountain Inc. (Nasdaq: GMCR) uses the razor-blade model to sell its single-serve coffeemakers at a loss… while selling 10.5 billion servings of coffee in ubiquitous K-Cup coffee pods for more than $330 million in net profit.
Bill is recommending another big "razor-and-blades" player in his daily Private Briefing service right now.
It's one of his gutsiest calls, and one where he was early – right where you want to be on a stock like this.
This company is using perhaps the most innovative variant of this old model today. These folks are taking their existing customer base – which has grown fivefold over the past two years – and locking up to 88% of them into very high-margin products for as long as five years.
Most analysts aren't seeing the upside Bill does – yet – but a savvy few have put a $36 target on this company, a 58% gain from where it sits today.
Eventually, Bill says, the "stock-recommendation mill is going to put this stock on the launching pad."
He's recommending folks make a move into this company before that happens. His readers can get this and all of his recommendations right here, and folks can learn about how to get Private Briefing for themselves – every day – over here.
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