If you’re looking to buy and hold some businesses over the long term then its worth looking to high-growth businesses with potential to set you up for a really comfortable future.
The businesses you want are those able to consistently grow year-on-year. Find these and you have little to worry about as the power of compounded returns takes effect to supercharge your returns over a 10 to 15 year time horizon.
For example investing an average monthly salary of $5,000 in these companies today would double your investment in five years and quadruple it in ten years if able to achieve an average return of 15% per year including dividends.
Here are a few with that kind of potential.
Cash Converters International Ltd (ASX: CCV) is a business with big growth plans that is trading at an attractive price of $1.04. It franchises stores that sell second-hand goods and already has over 700 stores in 21 countries. Moreover, it has concrete plans to move into massive and potentially lucrative markets like Mexico and Brazil. These new businesses aren’t expected to be material contributors in the short term, but over 5 to 10 years they could become explosive. Best of all Cashies looks cheap at today’s prices having been heavily sold-off after regulatory changes affected its business model in Australia.
Another business with better known growth potential is Domino’s Pizza Enterprises Ltd. (ASX: DMP). It’s hard to say just how far it can go, but management’s key recipe of selling mountains of cheap pizzas profitably looks a clear winner.
Success in Japan is testament to the all-round strength of its business and perhaps a harbinger of more great things to come. Profits just keep climbing and with a growing economy of scale, brand strength, and consumer demand for cheap pizza practically recession proof it remains one for big long-term gains.
Country Road Limited (ASX: CTY) shares have been on a tear this year with potential for plenty more to come. One key investing risk is liquidity with almost all the stock held by major shareholders. This means larger investors would struggle to find liquidity, however long-term focused small investors can use this to their advantage by buying a small parcel to set-and-forget as the business grows profits.
Country Road acquired the Witchery and Mimco stores recently to stunning effect. Witchery has more than 200 stores in Australia, New Zealand, Singapore and South Africa, while accessories business Mimco has nearly 100 stores around the world. Sales have been strong and Country Road plans to expand the brands and store numbers over time. If successful a small parcel of shares today could become a bag full of riches in ten years’ time. With low liquidity though investors should be patient to secure a price they are comfortable with.
Time in the market trumps all else, so while returns may be rocky in the short term all three businesses look the type to deliver consistent growth and big returns over long-term horizons.
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Motley Fool contributor Tom Richardson owns shares in Cash Converters. You can find him on twitter @tommyr345