Investing in the stock of great companies and holding for many years is a fantastic way of building wealth for your children. When you buy shares of companies with good returns on invested capital and hold them for a long time, compounding of your wealth can have meaningful results. This is especially so for your children by the time they reach adulthood.
Here are three stocks I'd buy for my kids today, and hold for many years.
Flight Centre Travel Group Ltd (ASX: FLT)
Flight Centre provides travel retailing, wholesaling and corporate travel management services. The company is led by a great founder, and has a strong presence in India where an expanding middle class could provide significant tailwinds. Its online presence and corporate travel management operations have also been strengthened and this augers well for the company. At an enterprise multiple of 7.9 I think this is a wonderful company at a reasonable price.
Ramsay Health Care Limited (ASX: RHC)
Ramsay Health Care is a healthcare service provider and operates primarily through the operation of over 220 hospitals in Australia, France, the United Kingdom, Indonesia and Malaysia. Its healthcare services include day surgeries, rehabilitation services, maternity services, and psychiatric services. The company is set to benefit from an expanding and ageing population, which should provide tailwinds for years to come. Ramsay has recently appointed an experienced CEO from within, and looks to be very well run. At the current share price, this is a great business at a fair price.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Washington H. Soul Pattinson is a diverse company that has interests in coal mining, distribution, and the retail of pharmaceutical products. The company also holds shares of other companies. Washington H. Soul Pattinson has demonstrated itself to be a strong company over many years, and some consider it an Australian version of Warren Buffett's Berkshire Hathaway. Soul Patts looks to be a strong compounder of invested capital over many years, and at the current share price it looks to be another wonderful company at a fair price. It currently trades at an enterprise multiple of 7.8.
Foolish takeaway
Flight Centre, Ramsay Healthcare, and Washington H. Soul Pattinson are strong companies that can provide fantastic returns over the long run. I'd buy the stock of these three companies for my kids, and hold for many years to come.
