Market volatility makes investors nervous. Fear and worry can be contagious, and it can be hard to escape the noise. Successful investing over the long term requires you to filter out the noise of the market. Invest in good quality companies, hold them for long periods of time, and let them compound your wealth. Here are 4 companies that I would buy today with a long-term time horizon. APN Outdoor Group Ltd (ASX: APO) APN Outdoor is an outdoor advertising company that operates in Australia and New Zealand. It offers advertising via digital and static billboards, as well as…
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Market volatility makes investors nervous. Fear and worry can be contagious, and it can be hard to escape the noise. Successful investing over the long term requires you to filter out the noise of the market.
Invest in good quality companies, hold them for long periods of time, and let them compound your wealth. Here are 4 companies that I would buy today with a long-term time horizon.
APN Outdoor Group Ltd (ASX: APO)
APN Outdoor is an outdoor advertising company that operates in Australia and New Zealand. It offers advertising via digital and static billboards, as well as transit, rail, and airport advertising. I have recently recommended APN Outdoor due its profits being made up primarily of cash. It has increased revenue year on year, and has a solid return on invested capital of over 23%. Its debt has increased, but with interest coverage of 22x and debt to equity of just over 30%, this shouldn’t be a problem. The company has not reported earnings to December 2017, but analysts have forecast earnings per share of 31c, the same as 2016. Even with a plateau in earnings I think the long term prospects for the company are strong.
SEEK Limited (ASX: SEK)
SEEK Limited provides online employment classifieds, as well as education and training services. Through its website, SEEK has a strong brand and near monopoly in the online job classified space. While the unemployment rate in Australia remains at historically low levels, according to the Internet Vacancy Index produced by the Australian Government Department of Employment, online job advertisements remain at near decade low levels. This gives a long growth runway for SEEK. Nonetheless, analysts are still forecasting strong growth in earnings per share over the next 3 years. I think this stock is a great option for a buy and hold investor.
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 has also been strengthened and this augers well for the company. Despite a recent surge in the share price, I still think that it offers fair value for a strong company. The shares currently trade at an enterprise multiple of 7.9, which is very reasonable for a company where forecasted growth is at 10% over the next three years.
Washington H. Soul Pattinson and Co. (ASX: SOL)
Washington H. Soul Pattinson is a diverse company that has interests in coal mining, distribution and retail of pharmaceutical products, and the manufacture of building products. The company is a major shareholder of TPG Telecom Ltd (ASX: TPM), Australian Pharmaceutical Industries Ltd (ASX: API), Brickworks Limited (ASX: BKW), and New Hope Corporation Limited (ASX: NHC) among others. The company looks to be a strong compounder of invested capital over many years, and at the current share price it looks to be a wonderful company at a fair price. It currently trades at an enterprise multiple of 7.8, which is on the cheap side. A number of its large holdings are also trading cheaply, including TPG and Brickworks. I think there is limited downside and a large potential upside for this stock.
I think that these 4 companies are great options for investors with a long term time horizon. Focussing on good quality businesses such as these is a good way of cancelling out the noise in the market. They won’t eliminate the volatility from your portfolio, but may provide market-beating returns over the coming years.
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Motley Fool contributor Stewart Vella has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Flight Centre Travel Group Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended SEEK Limited. 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.