One of the bedrocks of capitalism is that competition breeds better and better results for consumers. That's why we have antitrust laws in place to stop any one entity from gaining a monopoly over its industry.

But that doesn't mean such situations don't exist in the real world. Sometimes government agencies are slow to act, sometimes the niche being dominated is too small to garner much attention, and every once in a while, the "monopolizer" is simply offering a better product than the competition -- over and over and over again.

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However, while virtual monopolies might be frowned on in some parts, investors drool at the prospect of owning a business with such advantages. In the end, after all, your investment dollars will only grow if the companies you put them in have a distinct advantage over the competition. There's no better advantage to have than a virtual monopoly. That's why our three analysts think you should invest in Axon Enterprises (NASDAQ:AAXN)Sirius XM Holdings (NASDAQ:SIRI), and Fair Isaac (NYSE:FICO).

Stun guns today, body cameras tomorrow?

Brian Stoffel (Axon Enterprises): To appreciate the virtual monopoly Axon has, it's important to know that the company used to be called TASER International. While the name might have changed, non-lethal weapons are still the bread-and-butter drivers for the company. Last year alone, Axon sold over 37,000 TASER weapons, and over 550,000 reusable cartridges. 

Investors should take solace in this virtual monopoly, as it will help the company in its attempt to create a second virtual monopoly: providing police departments with body cameras and a platform to store, search, and analyze all of the data they collect. The company is already well on its way: 38 of the country's 68 largest police departments use Axon cameras and its Evidence.com platform.

Perhaps more importantly, Axon announced earlier this year that it would be giving its cameras and a year's subscription to Evidence.com away for free. That should be a deal too sweet for departments to pass up, and too costly for the competition to match. Given the high switching costs associated with Evidence.com, I think that could lead to a second virtual monopoly for the company.

One of the few sub-$10 stocks worth buying

Matt Frankel (Sirius XM): It's tough to think of a company with more of a monopoly than Sirius XM has on satellite radio. In fact, there is no No. 2 company in this category.

Barriers to entry are high, which mitigates the risk that someone else will enter the space and steal market share from the company. The company also has high-demand content that isn't available anywhere else, such as the extremely popular program The Howard Stern Show, which has helped the company grow to more than 32 million subscribers.

In recent years, Sirius has begun to develop into a company with steady, sustainable growth, increasing its revenue by about 10% per year for the past three years. With $1.5 billion in free cash flow expected this year, along with declining debt levels, aggressive share buybacks, and a recently implemented dividend, Sirius XM has come a long way since the company was close to bankruptcy in 2009. It's no wonder Sirius XM is one of the few tech stocks Warren Buffett is willing to put Berkshire Hathaway's money behind.

To be clear, consumers can certainly choose to listen to services like Pandora, Spotify, or their local radio stations instead, so Sirius XM does have some competition for radio listeners (although it does own a stake in Pandora). However, the company's superior product and shareholder-friendly capital allocation make it a good choice for long-term growth investors.

Give credit where it's due

Rich Duprey (Fair Isaac): When people think of their personal credit rating, the one thing that comes to mind is their FICO score, the number assigned to them by Fair Isaac and which "is used by the vast majority of lenders to make credit decisions." Like Kleenex or escalator, a FICO score is synonymous with credit scoring giving Fair Isaac a virtual monopoly, even though there are other credit rating services.

Especially in light of the massive data breach that just occurred at credit reporting bureau Equifax (NYSE:EFX) that exposed the most sensitive personal information of 143 million Americans, individual FICO scores are going to be on a lot of people's minds as they monitor the impact on their credit.

The timing of the breach coincided perfectly with Fair Isaac's recent survey that found 44% of U.S. consumers worried more about identity theft and banking fraud than they did about being the victim of a terrorist attack, for which only 18% were concerned. It was also double the 22% who thought their own death or that of a loved one was a primary concern.

Fair Isaac generated over $194 million in revenue from the sale of FICO scores in the first three quarters of 2017, up from $178 million the year before. That suggests it's not being hurt too much by the competing VantageScore launched by Equifax, Experian, and TransUnion. And with this major breach of trust, the FICO score will become even more critical.

Brian Stoffel owns shares of Axon Enterprise. Matthew Frankel has no position in any of the stocks mentioned. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Axon Enterprise and Pandora Media. The Motley Fool has a disclosure policy.