3 market thumping shares to buy and hold for the next decade

The ten-year compound average growth rate (CAGR) of the S&P/ASX Small Industrials Index to the 31 July 2016 was just 4.1% per annum (pa).

That’s a pretty meagre return considering the risk of not just owning equities but small company equities too.

In fact, a return that low would have been hard pressed to beat the lower risk strategies of holding high yield bonds or even term deposits!

In comparison, over the past decade the following three companies have absolutely thumped the index’s return with double digit total shareholder return (TSR) growth rates.

What’s more, there would appear to be plenty of scope for each of these stocks to continue to produce solid returns over the next decade.

InvoCare Limited (ASX: IVC) – As they say nothing in life is certain, except death and taxes

Invocare commands a market leading position (estimated at around 34%) in the domestic funeral market, along with a presence in both New Zealand and Singapore.

Amongst its best known brands are White Lady Funerals and Simplicity Funerals. The group operates across 250 locations which include 16 cemeteries and crematoria.

With the balance sheet strength to make multiple acquisitions, since 2005 revenues have grown at a CAGR of 9% pa.

The earnings before interest, tax, depreciation and amortisation (EBITDA) margin is a very healthy 24%.

Revenue growth and strong margins combined have helped Invocare achieve a TSR of 14.6% pa over the past decade.

Technology One Limited (ASX: TNE) – successful software companies can produce stellar returns

Technology One develops what it described as integrated enterprise business software solutions. In plain English, this is software that helps organisations run their critical business systems such as payroll and supply chains.

While the group can boast of wide adoption of its software products, considering the success of Technology One, this $1.8 billion company doesn’t seem to garner that much investor attention.

In fact, Technology One has been an outstanding investment for savvy long-term holders of the stock with the share price gaining around 50% in the past year, 420% in the past five years and 760% in the last ten years.

What’s more, the group can boast of continually paying dividends since 1996 and having been profitable every year since 1992!

This track record has resulted in a 10 year TSR of 27.5% pa.

AUB Group Ltd (ASX: AUB) – a rollup strategy that has stood the test of time

AUB operates one of Australia’s largest networks of insurance brokers with over 450,000 clients across 75 equity businesses and 310 locations.

Having already benefited from playing a leading role in consolidating the industry, AUB still has plenty of scope to continue its strategy of bolting on insurance broking firms as well as expanding its services outside of its traditional Australian insurance broking.

The group’s long term growth profile of rising earnings and dividends has been reflected in a solid TSR over the past decade of 17.5% pa.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

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