In this article, we’ll look at 10 stocks that are nearly monopoly in the US. If you want to see more of the stocks in this selection, go to it 5 Nearly Monopoly Stocks in the US.
Monopoly is defined as a market arrangement in which one seller dominates the market and offers a unique product. In its purest form, monopoly has 100% market share. Many industries are dominated by leading players with significant market shares. These companies enjoy economies of scale and create barriers to entry for any new potential players to emerge and break their dominance. Companies like Alphabet Inc. (NASDAQ:GOOGL), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN) that has entered a sector and absorbed a large share of the market is considered to be close to a monopoly. These businesses often diversify their product lines to increase market share and revenue. Although businesses provide room for competition, they generate significant market power over the industry.
Monopoly enjoys strong pricing power, and renowned investor and philanthropist Warren Buffett considers it a factor when he selects the stocks for his portfolio that millions of investors follow and track globally. Back in 2011, when the Oracle of Omaha was asked to testify before the US Congress and provide reasons for investing in Moody’s Corporation (NYSE:MCO), he highlighted that pricing power is one of the most integral criteria for evaluating a business. . He added, if a business can increase prices without losing its market share by industry peers, then the business has a strong business model. Moody’s, along with two other credit rating agencies, own 95% of the credit rating market. The New York-based entity is still the eighth largest investment in the portfolio of Omaha, Nebraska diversified conglomerate Berkshire Hathaway Inc (NYSE:BRK-B), valued at nearly $6 billion in Q3 2022.
Interestingly, Apple Inc (NASDAQ:AAPL) is the largest holding in Berkshire Hathaway’s portfolio, valued at over $123.6 billion in Q3 2022. The tech giant holds monopoly or near-monopoly positions in many industries. Meanwhile, American Express Company (NYSE:AXP) is the fifth largest investment in Warren Buffett’s portfolio. The New York-based company provides credit and debit cards along with Visa, Inc. (NYSE:V) and Mastercard Incorporated (NYSE:MA). Together, these three entities hold a 99% stake in the credit and debit card industry. All of these monopolies or near monopolies generate healthy profits and get positive feedback from experts. Another example is the Coca-Cola Company (NYSE:KO), which is the fourth largest in Berkshire Hathaway’s portfolio. Together with PepsiCo, Inc. (NASDAQ:PEP) and Keurig Dr. Pepper Inc. (NASDAQ:KDP), these three companies hold a 57% market share in the soda industry.
Pixabay/Public Domain Our Methodology
We’ve selected 10 near-monopoly stocks in the US based on their market share. Four of the companies on the list are members of the FAANG list of Meta Platforms, Inc. (NASDAQ:META) (formerly known as Facebook), Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. :AAPL), Netflix, Inc. (NASDAQ:NFLX), and Alphabet Inc. (NASDAQ:GOOGL) (formerly known as Google). Big Tech Companies hold a dominant market share in various technology product and service markets such as cloud computing, e-commerce, mobile application services, mobile operating systems, search engines, social networks, and web browsers. Meanwhile, the remaining shares on the list hold near-monopoly positions in the alcoholic beverages, personal credit rating, and satellite radio sectors. The shares have been rated in terms of the number of hedge funds that have shares in them as of Q3 2022.
10 Nearly Monopoly Stocks in the US
10. Pearson plc (NYSE:PSO)
Number of Hedge Fund Holders: 3
Pearson plc (NYSE:PSO) is a London, England-based provider of educational assessment and publishing services with a rich history spanning over 180 years. The company is known as the world’s largest publisher of educational materials and textbooks.
Pearson plc (NYSE:PSO) generates approximately two-thirds of its top and bottom line from the US market, as it has more than 40% market share in the US in online program appraisal, publishing and management. The market for publishing services and other educational assessments is highly fragmented, with thousands of smaller players. In a research note issued Dec. 12, Daniel Kerven at JPMorgan raised his target price on Pearson plc (NYSE:PSO) from $13.02 to $14.74 and reiterated his Overweight rating on the stock. The revised target price reflects a potential increase of more than 29% from the closing price on December 20. Pearson plc (NYSE:PSO) has made major acquisitions in the past to solidify its monopoly position in the education sector.
13D Management was the leading hedge fund investor at Pearson plc (NYSE:PSO) during the third quarter of this year.
9. Sirius XM Holdings Inc. (NASDAQ:SIRI)
Number of Hedge Fund Holders: 24
Sirius XM Holdings Inc. (NASDAQ:SIRI) is a New York-based satellite and online radio provider broadcasting music, live sports, news, and original talk.
The company has monopoly status in the satellite radio market. Sirius XM Holdings Inc. (NASDAQ:SIRI) also countered Pandora’s quest for market share by acquiring the company in July 2021 for $3.5 billion. Bryan Kraft at Deutsche Bank assigned shares of Sirius XM Holdings Inc. (NASDAQ:SIRI) with a target price of $7.50 along with a Buy rating on November 2 after Q3 2022 results. Experts believe the company reported decent Q3 results as installs and customer numbers match expectations. On December 1, Bloomberg reported that Sirius XM Holdings Inc. (NASDAQ:SIRI) intends to lower its headcount to streamline its operations and costs. The company finished 2021 with a total of 5,590 employees.
In Q3 2022, Sirius XM Holdings Inc. (NASDAQ:SIRI) is held by 24 hedge funds.
8. Fair Isaac Corporation (NYSE:FICO)
Number of Hedge Fund Holders: 34
Fair Isaac Corporation (NYSE:FICO) is a San Jose, California-based data analytics software company founded in 1956.
The company is known for its three-digit consumer credit risk rating, known as a FICO score. The score has become a benchmark in the multi-trillion consumer loan and mortgage business in the US. Fair Isaac Corporation (NYSE:FICO) has faced numerous antitrust lawsuits related to its monopoly on consumer credit ratings. There are claims that those who are not assessed by FICO are disadvantaged and not creditworthy enough when applying for a loan or mortgage. Manav Patnaik at Barclays raised his price target for Fair Isaac Corporation (NYSE:FICO) from $575 to $700 and repeated his Overweight rating on December 2. The role of consumer credit risk ratings such as those offered by the Fair Isaac Corporation (NYSE:FICO ) becomes even more important during periods of economic downturn as banks and other financial institutions look more closely at borrowers’ creditworthiness.
7. Altria Group, Inc. (NYSE:MO)
Number of Hedge Fund Holders: 47
Altria Group, Inc. (NYSE:MO) is a manufacturer and marketer of tobacco, cigarettes and other related offerings based in Richmond, Virginia. This company is the parent company of Phillip Morris USA.
Through its broad portfolio of brands, Altria Group, Inc. (NYSE:MO) has the advantage of being the largest player in the cigarette and tobacco manufacturing industry, with a market share of around 50.6% of the industry’s total revenue. This gave Altria Group, Inc. (NYSE:MO) strong pricing power and ability to generate strong top-line and bottom-line results. The stock also offers an attractive one-year dividend yield of 8.05% as of December 20. Christopher Growe at Stifel has designated Altria Group, Inc. (NYSE:MO) with a target price of $50 with a Buy in update rating issued to investors on October 28. Analysts highlighted that news of the company’s development of a joint venture with Japan Tobacco overshadowed its Q3 2022 EPS loss.
6. Anheuser-Busch InBev SA/NV (NYSE:BUD)
Number of Hedge Fund Holders: 58
Anheuser-Busch InBev SA/NV (NYSE:BUD) is a St. Petersburg-based brewing company. Louis, Missouri which has a leading global brand.
The owner of Budweiser, Bud Light, Stella Artios and many other brands is reputed to be the largest brewing company in the world and has a 40% market share in the US beer industry. The company’s market share is significantly higher than other players in the industry. Jared Dinges at JPMorgan awarded Anheuser-Busch InBev SA/NV (NYSE:BUD) stock a double upgrade on November 28 from Underweight to Overweight and raised its target price from $45 to $70. Analysts anticipate Anheuser-Busch InBev SA/NV (NYSE:BUD) to beat consensus earnings forecasts for the next quarter and highlight the company’s efforts to lower its debt.
Broyhill Asset Management shared its views on Anheuser-Busch InBev SA/NV (NYSE:BUD) in its Q4 2021 investor letter. Here’s what the company had to say:
“Part of ABI struggled to combat double-digit declines in emerging market indexes in the second half of the year. Consensus concerns around commodity cost drag have certainly not helped, but beyond short-term margin pressures, both businesses have continued to increase their profits as well as their economic moats. ABI controls more than a quarter of the nearly $600 billion global beer market, according to Euromonitor data, and remains well positioned for a post-pandemic rebound in industry sales.”
In addition to Anheuser-Busch InBev SA/NV (NYSE:BUD), popular companies such as Alphabet Inc. (NASDAQ:GOOGL), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. leadership positions in various sectors in the US.
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Disclosure. There is no. Monopoly Definition and 10 Nearly Monopolistic Stocks in the US originally published on Insider Monkey.