The best way to beat the market over the long-term is to give your investment thesis the time it needs to play out. No-one can know what the market, or an individual share, will do over the next week, month or even the next year. The trouble with that strategy is that most people don’t have the patience to simply wait – but that’s the best thing you can do. Once you’ve invested in a share you simply have to wait for a number of years. Sounds simple right? It is. But it isn’t easy choosing what shares to buy….
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The best way to beat the market over the long-term is to give your investment thesis the time it needs to play out. No-one can know what the market, or an individual share, will do over the next week, month or even the next year.
The trouble with that strategy is that most people don’t have the patience to simply wait – but that’s the best thing you can do. Once you’ve invested in a share you simply have to wait for a number of years. Sounds simple right? It is. But it isn’t easy choosing what shares to buy.
You could go for a simple index fund like Vanguard MSCI Index International Shares ETF (ASX: VGS). Or, if you want to buy quality shares, here are three ideas:
InvoCare Limited (ASX: IVC)
InvoCare is the largest funeral service provider in Australia. It has a number of different national and local brands to appeal to various price points for families.
It has quite defensive earnings because, sadly, a certain number of people die each year.
It’s a long-term growth idea because death volumes are expected to grow by 1.4% per annum between 2016 to 2025 and then increase by 2.2% per annum from 2025 to 2050. This will be a slow and steady tailwind for InvoCare. It’s refurbishing its locations to be more of a celebration of a person’s life.
It’s currently trading at 23x FY19’s estimated earnings.
Challenger Ltd (ASX: CGF)
Challenger is the largest annuity provider in the country. Its main source of earnings is selling annuities to people who wish to turn their capital into a guaranteed source of income over time.
It has a good long-term future because its client base – people who just retired at around age 65 – is projected to increase by 75% over the next two decades.
Another good factor is that the regular tax-efficient contributions to super mean those annuities will likely become bigger and bigger over time due to compounding.
Challenger is currently trading at 17x FY19’s estimated earnings.
Japara Healthcare Ltd (ASX: JHC)
Japara is one of the country’s largest aged care providers. The ageing population of our country means that more and more people are going to need specialised care, which Japara can provide.
The company expects to add more than 1,000 new operational places over the next few years, which will be a boost to revenue and hopefully to the net profit.
It’s currently trading at 17x FY17’s earnings.
I believe there’s a good chance all three shares will deliver market-beating returns over the next decade, that’s why they’re in my portfolio. At the current prices I think InvoCare looks like the best value as it invests in its locations for future growth.
Another share that has a great chance of beating the market over the medium-term is this top stock which is just expanding into Asia and it's predicting profit growth of 30% this year.
It's been a nail-biter of a reporting season here in the first half of 2018.
But the real action, in my opinion, is what companies are doing with dividends.
What does this mean for you? Well there is one stock I've found that could very well turn out to be THE best buy of 2018. And while there's no such thing as a 'sure thing' when it comes to investing - this ripper might come as close as I've ever seen.
Motley Fool contributor Tristan Harrison owns shares of Challenger Limited, InvoCare Limited, and JAPARA DEF SET. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. 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 Scott Phillips.