One time-honoured approach to investing is to pick high quality companies and hold them for the long term. It's the strategy Warren Buffett is most famous for, although plenty of fund managers follow it.
Importantly, it's one of the easier strategies accessible to the household investor, since the primary ingredient is patience. Here's my take on 4 high-quality businesses that can be held for the long term:
CBL CORP FPO NZX (ASX: CBL)
A business you've probably never heard of, CBL Corp is a New-Zealand based specialty insurer with operations primarily in France. It has well aligned and experienced management, as well as a track record of creating high-margin, niche products and generating profitable growth. Expansions into new markets carry long term potential.
XERO FPO NZX (ASX: XRO)
Xero's accounting software is reportedly one of the best in the market, although there's no doubting that its marketing is also top notch. That partly explains how it's catapulted over the heads of competitors to secure a dominant market share in ANZ in just a few years. With expansions into the UK and USA underway, and continued heavy spending on research & development (R&D), replication of its ANZ feats could see this company grow for many years into the future.
CSL Limited (ASX: CSL)
CSL Limited is a blood product manufacturer with global reach, and an active R&D department which has a long record of creating profitable new products. Well-aligned management promotes from within, and CSL has a strong balance sheet that generates loads of free cash. The drawback is that its potential is well recognised, and its price looks high.
Altium Limited (ASX: ALU)
Altium develops software that is used for designing printed circuit boards (PCBs), the 'brains' which control an ever-wider range of equipment and devices. The company has shown the capability of its business model both by growing market share, as well as by successfully passing price rises on to end-users without significant customer loss. As with CSL, the major drawback is the company's high price.
