Mad Money

Cramer: This move by Amazon is a clarion call to buy the stock

Key Points
  • "Mad Money" host Jim Cramer explained why buying shares of Amazon, Netflix and Costco when they raise their subscription prices is a winning strategy.
  • The fact that most subscribers don't care about paying Amazon an extra few dollars per month means the stock can rise unopposed, Cramer said.
Cramer: Why Amazon's latest move is a sign to buy the stock

When a company like Amazon raises the prices for its service and nobody cares, CNBC's Jim Cramer sees a clear next move.

"When you see something like that, it's about as clear a buy signal as you are ever, ever, ever going to get," the "Mad Money" host said on Friday after Amazon upped the price of its monthly Prime membership rate by 18 percent.

The price boost — from $10.99 to $12.99 for full-paying members — will total $156 a year, a "smart" move considering Amazon's yearly membership rate of $99 will remain the same, Cramer said.

"It's basically a tax on people who only pay month-to-month," he said.

Better yet, Cramer expected no resistance "whatsoever" to the price increase thanks to the quality and value that Amazon's Prime service provides.

"I bet most people don't even notice the price hike," he said. "That's why Amazon remains a go-to name for anyone who needs a high-growth stock to round out their portfolio."

The same goes for Netflix, Cramer argued. Nobody cared or resisted when the streaming giant raised the price of its 4K plan, which offers higher quality content, to $13.99 a month.

"Given that I pay $24 for two seats in a movie theater — $24 for a couple of maybe lousy hours of entertainment, pre-popcorn-and-candy, by the way — I'm thrilled to shell out a little more than just half that to binge on quality homegrown programming ... for a whole month," Cramer said.

Customers of Costco, which boasts some of the biggest bargains on the market, also tend to overlook when the big-box retailer raises the price of its membership cards, Cramer noted.

Apple's cloud service revenues also fall into this category. If privately-held music app Spotify ever comes public, its subscription-based service likely will, too, he said.

"The next time you get hit with a price increase and it doesn't bother you one bit, you need to pay up for the stock of that company in question, maybe even the next day," the "Mad Money" host concluded. "In every instance I just mentioned ... it's been worth it."

WATCH: Cramer on the right time to buy subscription stocks

Cramer: This move by Amazon is a clarion call to buy the stock

Disclosure: Cramer's charitable trust owns shares of Apple.

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