There's a great saying which is important for all investors to understand:
'It's not about timing the market; it's about time in the market.'
The point of this saying is to alert investors to the often fruitless task of trying to accurately buy in and sell out of the market. Timing can become almost addictive for some investors. Rather than focusing on valuing stocks and thinking about the underlying business they are buying they become obsessed with the constant ups-and-downs of the share price and trying to buy in at the best price.
In the long run, every up and down blip fades considerably into oblivion when you own a good stock which grows over time. Take a look at the long-term trend of the market and you'll see the same thing – despite its daily moves, the long-term trend of the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) has been up.
As I highlighted in this recent article, a low double-digit rate of compounding and a couple of decades of diverting some of your salary into your portfolio is a tried-and-true way of building wealth. It's not rocket science but admittedly it's no walk in the park either to achieve a double-digit return.
Given the time frame of decades, I'm looking for businesses which have a long, positive runway ahead of them with plenty of potential for growth. Here are three stocks which I think could be significantly larger and more profitable in the future.
- Virtus Health Ltd (ASX: VRT) – As the leading provider of IVF services, Virtus is well positioned to grow in line with market growth in Australia while also expanding its overseas operations.
- Japara Healthcare Ltd (ASX: JHC) – As a provider of residential aged care facilities, Japara is well placed to benefit from an aging and affluent population.
- Macquarie Group Ltd (ASX: MQG) – Australia's leading investment bank has no shortage of opportunities to expand its financial services both in Australia and globally.
