2 stocks to hold forever

It’s been proven by many studies that investing for the long-term generates the best returns, particularly as it reduces the brokerage costs.

Of course, there’s no point holding onto a stock for the long-term if it’s going to generate a poor performance. If you want to invest for the long-term you want to choose shares that will be good for investors for a very long time.

Long-term investing means identifying businesses that have long-term growth potential, a durable economic moat and good economics.

Here are two shares that I’d be happy to hold forever:

Cochlear Limited (ASX: COH)

Cochlear is one of the world’s leading hearing implant companies. The business has a large opportunity because over 5% of the world’s population, 360 million people, has ‘disabling hearing loss’. This is represented by 328 million adults and 32 million children.

Nearly one in three people over the age of 65 are affected by hearing loss. That represents a big opportunity considering Australia’s over-65 population is going to grow by 75% over the next 20 years. There are similar ageing demographics in other western countries.

Cochlear believes that there are 37 million people that could benefit from a Cochlear implant to treat severe to profound hearing loss.

The business now has a ‘lifetime relationship’ with more than 450,000 recipients and the Cochlear Family membership grew by more than 150% in FY17 so that there are around 60,000 recipients.

In FY17 the earnings before interest and tax (EBIT) margin increased from 23% to 25%, showing that the company’s economic moat is getting stronger.

Cochlear is currently trading at 39x FY18’s estimated earnings.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Patts is one of the oldest businesses on the ASX, having operated for around a century. I think that the business could be operating for many decades to come thanks to its structure and strategy.

It’s an investment conglomerate that invests in businesses for the long-term such as TPG Telecom Ltd (ASX: TPM) and Australian Pharmaceutical Industries Ltd (ASX: API). This approach has served it well as it has outperformed the Australian share market over long-term time periods such as a decade.

Soul Patts has long-term management in place with many generations of the same families serving the company.

It’s trading at 16x FY18’s estimated earnings.

Foolish takeaway

Cochlear is trading far too expensively for me to consider a buy at the moment, but Soul Patts could make a good long-term buy at today’s price.

At least one of these top shares could also make an excellent buy to hold forever.

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Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended TPG Telecom Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Cochlear Ltd. 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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