The world’s greatest investor Warren Buffett has often said that his favourite holding period for investments is forever.
That’s almost fantasy land for many investors, but it is clear from many studies and the results of the best investors, is that the key to successful investing is to buy high-quality stocks at a cheap price and hold them for a very long time.
Here’s an example…
New Zealand small cap manager Pie Funds noted today that its first tenbagger Vita Group Limited (ASX: VTG) became its first twentybagger last week.
ASX:VTG, our 1st tenbagger, hit another milestone and became our 1st twentybagge last week. Congrats team pic.twitter.com/IfEEw2Tj2jMike Taylor (@piefundsnz) August 7, 2016
Investors can’t achieve that unless they hold stocks for an extended period of time – and despite the many falls along the way. Since January 2012, Vita Group has seen its share price fall by more than 5% 31 times and by more than 10% once. That’s 31 times investors needed to resist the urge to sell for one stock over just 3 and a half years. But holding is how investors can end up holding shares in a company that are worth 20 times more than they paid for them.
Here are four companies investors might want to consider buying now and holding no matter what for the next two decades…
Vocus Communications Ltd (ASX: VOC)
The telecommunications giant with a market cap of $5.3 billion has rolled up Amcom and M2 Group in the past 18 months or so to compete with the likes of Optus, TPG Telecom Ltd (ASX: TPM) and Telstra Corporation Ltd (ASX: TLS). As one of Australia’s largest telecommunications companies with a variety of products and services, Vocus is going to benefit for many years from the growing demand for data and an interconnected world.
Wesfarmers Ltd (ASX: WES)
An old-fashioned conglomerate, Wesfarmers owns supermarket operator Coles as well as what is regarded by some as Australia’s best business, home hardware retailer Bunnings. The company also owns and operates Kmart, Target, Officeworks and a number of other diversified businesses. Many of those businesses are likely to still be doing the same thing in 20 years, including its largest division Coles.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
If you want diversity without selecting a Listed Investment Company then your first port of call should be Soul Patts – as the company is known. Another conglomerate, Soul Patts appears to have modelled itself on Buffett’s Berkshire Hathaway, owning a number of businesses outright, a dominant stake in several including TPG Telecom and a multi-million dollar investment portfolio holding shares in other listed businesses. It may not be exciting, but has produced the goods for a very long time. How about a company that has paid a dividend every year for more than 100 years? That’s Soul Patts.
Bapcor or Burson Group Ltd (ASX: BAP) as Google Finance refers to it
Bapcor is a distributor and retailer of automotive parts and accessories to a huge customer base around Australia. Given our love of automotive travel, it’s hard to see the car disappearing anytime soon – even if they do increasingly become electric. Even electric cars need parts replaced and regular servicing.
Recent acquisitions and ongoing organic growth continue to drive the business and Bapcor could positively surprise the market when it reports its full-year results on August 18.