Buying businesses on the share market and holding onto them for the long-term can be one of the greatest ways an investor can build their wealth. But it’s not as easy as buying just any old business.
Indeed, investors need to be careful not to overpay for even the highest quality companies, while they must also possess temperament and a whole lot of patience. After all, the share market is known for throwing curve balls at investors without a moment’s notice, so investors need to be committed to holding on for the long-haul.
Last week, my colleague Tim McArthur wrote a great piece on how he would invest $2,000. While he certainly named some quality corporations, he also said that investing isn’t a ‘one size fits all’ business, whereby each investor has their own separate needs and concerns.
Right now, there are a number of uncertainties facing investors, including a potential Brexit (Britain will vote whether to exit the European Union next week), a slowdown in China’s economy, and a potential Trump presidency (yes, that is a concern for many individuals).
As a result of those uncertainties, some investors with cash to deploy may be more inclined to invest in businesses which stand a greater chance at surviving – or even thriving – through times of elevated uncertainty.
Burson Group Ltd (ASX: BAP) is one such business that I believe fits the bill. The company is a specialist in the automotive aftermarket parts industry, providing the parts necessary for the repair and servicing of older vehicles. Consumers typically hold onto their older cars for longer when times get tough, resulting in more business for Burson. The company is quickly expanding its store count while it has also demonstrated its ability to pass cost increases onto customers.
Another business that deserves close attention is iSentia Group Ltd (ASX: ISD), which provides media monitoring services. The company has plenty of room to grow (both internationally and domestically), while it is also a somewhat defensive play. Indeed, iSentia offers a vital service for many companies at a reasonable price, so I believe they would be somewhat protected in a tougher economy.
Bulletproof Group Ltd (ASX: BPF) is a smaller company that you mightn’t have ever even heard of. It is more risky than either Burson or iSentia Group, but also stands to benefit from the rapid trend towards cloud computing. Transitioning to the cloud can be a complex operation that creates unnecessary stresses for management, many of which would prefer to outsource that task to a business like Bulletproof.
Investors looking for safe and familiar should also take a closer look at Telstra Corporation Ltd (ASX: TLS). Of course, investors should be aware of the numerous outages experienced by Telstra’s customers in recent months which could dent the company’s reputation if the problems continue, but for now, the company enjoys strong customer loyalty and cash flows, while it also offers a tasty 5.7% fully franked dividend.
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Motley Fool contributor Ryan Newman owns shares of BULLETPRF FPO, Burson, and iSentia Group Ltd. The Motley Fool Australia owns shares of Burson. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.