One of the simplest investment strategies that investors can use is the buy and hold strategy.
The idea behind the strategy is simply that investors buy high quality shares that have solid long term growth prospects and hold onto them for long periods of time.
This strategy is used by everyone from retail investors to legendary investor Warren Buffett.
And considering the latter has amassed a fortune estimated to be approximately US$81 billion today largely by using it, I think it is well worth considering its use.
With that in mind, here are three shares that I think could be great buy and hold options:
A2 Milk Company Ltd (ASX: A2M)
While there is always a risk that regulatory changes in China could one day impact a2 Milk Company, for now this is certainly not the case. In fact, during the first four months of FY 2019 the company reported a 64.5% jump in net profit to NZ$86 million due largely to increasing demand in China. Thanks to its strong brand appeal and expanding distribution network, I expect further strong earnings growth in the coming years. This could make it worth considering as a buy and hold investment.
ResMed Inc. (ASX: RMD)
I think that this leading sleep treatment focused medical device company could be one of the best buy and hold investment options on the local share market. With the sleep apnoea device market expected to grow significantly over the next decade, I believe ResMed is in a strong position to continue its impressive earnings growth for the foreseeable future. Demand for its products has remained strong in FY 2019, leading to the company recently posting a 23% increase in first quarter net income.
Webjet Limited (ASX: WEB)
Webjet has already proven itself to be a quality buy and hold option for investors. Over the last decade the online travel agent has provided an average annual total return of approximately 31.8%. While I don’t expect returns of this level over the next decade, I believe it is well positioned to be a market beater thanks to the growing popularity of its B2C and B2B brands. This year, for example, management expects EBITDA growth of 26% excluding the contribution of its recently acquired Destinations of the World business.
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended ResMed Inc. and 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.