Something I think about a lot is the types of businesses that will grow and compound for decades to come.
ASX listed stocks that can skillfully exploit assets or business models often have the ability to radically transform small investments into significant wealth. Here are three companies I would nominate as worthy of keeping forever today.
WiseTech Global Ltd (ASX: WTC)
WiseTech Global provides cloud-based software which links the highly fragmented logistics industry together like a web.
Each time WiseTech expands into a new geography and connects new customers it extends this reach, creating additional value for existing customers in a form of network effect.
The vast majority of WiseTech's earnings are also injected back into the business to further develop its platform. This means the company is continually expanding its competitive advantage by developing new features and improving functionality to put distance between it and its rivals.
The continual reinvestment, along with the growth in small, low-value goods being shipped around the world, makes WiseTech a company I would be prepared to keep forever.
Xero Limited (ASX: XRO)
You know what's not going away in our lifetime? Taxes. And when it comes to companies with the potential to keep forever I think accounting platform Xero has a decades long pathway ahead of it.
Xero will be a long-term beneficiary of the global shift towards online and automated tax processing with many countries, including the UK, starting a push to make tax more digital.
In addition Xero customers are incredibly sticky. Once a business's transactions, payments and accounting processes are structured around Xero's platform it is a daunting task to switch to a competitor.
By cleverly establishing itself as a trusted brand for small businesses Xero will be able to continue commanding a premium price for its service against competitors.
CSL Limited (ASX: CSL)
CSL Limited is one of the most phenomenally successful ASX listed businesses and one I think every investor should study.
Though I don't own shares in the company it is still one I would consider buying to keep forever.
CSL has an incredible ability to make money from its portfolio of intellectual property derived through extensive research and development and acquisitions.
Over the last 5 years CSL has invested over US$2.9 billion into R&D to continually expand its product line targeting an ever growing market.
Development of medical products always comes with risks and robust competition; however I think if CSL continues to re-invest aggressively the company will remain a crucial market player for decades to come.
