During an interview with CNBC last year, legendary investor Warren Buffett reiterated his view that his favourite holding period is forever.
Whilst this doesn’t mean that Buffett won’t ever sell shares, unless he believes there is something fundamentally wrong with the business, Buffett appears happy to hold onto his investments for the long-term.
Considering his net worth is estimated to be in the region of US$80.6 billion (A$113.2 billion), clearly he has had a lot of success with this simple strategy.
If you want to replicate this strategy, I feel the first step is to find quality businesses on the Australian share market that have solid long-term growth prospects.
Three shares that tick a lot of boxes for me right now are listed below. Here’s why I think they could be great buy and hold investments:
Altium Limited (ASX: ALU)
Altium is an award-winning printed circuit board (PCB) design software provider which I believe could be a great long-term option. Due partly to the Internet of Things boom, the PCB industry is expected to grow strongly over the next decade. Thanks to the quality of its products and innovative new releases, I believe Altium will win a larger slice of the market in the coming years. Combined with its fledgling Octopart business, I’m confident it can achieve its target of at least US$200 million in revenue by FY 2020. This compares to revenue of US$140 million in FY 2018. And with management intent on expanding its margins meaningfully as it scales, I feel the company is capable of growing its earnings at an above-average rate for the next few years at least.
CSL Limited (ASX: CSL)
I think this global biotechnology giant is the best buy and hold investment option on the Australian share market due to the quality of its operations, talented management team, and positive long term growth prospects. Over the last decade it has rewarded shareholders handsomely with an average total return of close to 20% per annum. This year CSL expects to build on FY 2018’s strong result with a profit in the range of US$1,880 million to US$1,950 million. This will be an increase of 10% to 14% on FY 2018’s underlying result.
Webjet Limited (ASX: WEB)
Investors that have been holding this online travel agent’s shares over the last decade have done incredibly well. During this time Webjet’s shares have provided an average annual total return of 30.5%. This means that a $20,000 investment in its shares 10 years ago would have grown to be worth over $285,000 today. While I wouldn’t expect the same level of return over the next decade, I believe it has market beating potential thanks to the growing popularity of its numerous brands and the favourable shift to online booking.
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended Webjet 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 Scott Phillips.