I think the best way to invest is to buy and hold for at least a decade.
When you think long-term you are more likely to be able to ignore market gyrations. It also means you cut down on brokerage costs and capital gains tax events.
With that in mind, here are three ASX shares I’d happily buy and hold for a decade:
Xero Limited (ASX: XRO)
The cloud accounting business has been a top performer in 2019. Some might say the software business is now expensive but over the next decade it could prove to be cheap at today’s price.
It generates an enormous amount of recurring revenue at a very high gross margin of 83.6%. Xero finally generated a profit in the second half of FY19 and also made generated free cash flow of $6.45 million for the year.
The company is going to continue to invest for more growth, but more of the revenue will fall to the bottom line in the coming results because of its high profit margin.
In a few years Xero could become one of the ASX’s largest non-bank companies at the rate it is growing subscribers and revenue.
REA Group Limited (ASX: REA)
The property market is looking up after the Federal election win by the Liberals and there could be a large amount of properties coming onto the market with uncertainty over, which would be an enormous help for REA Group’s profit from realestate.com.au.
REA Group could also benefit from a lowering Australian interest rate. Not only could this help property prices but it may also increase the valuation of REA Group shares.
Being able to clip some revenue from every property sale in Australia is a very useful position for long-term earnings. Its overseas investments in Asia and the US could also turn into sizeable earnings for the company.
Costa Group Holdings Ltd (ASX: CGC)
Today’s profit downgrade was disappointing, but it provides long-term investors the opportunity to buy in at a much cheaper price than investors for the past two years.
Australia’s largest horticultural business grows citrus fruit, mushrooms, avocados, berries and tomatoes. Some of these categories are facing short-term issues at the moment, but that isn’t likely to always be the case, which is why I think today’s news could be a long-term opportunity as the company continues to invest for growth.
Xero and REA Group are doing well but are expensive, whilst Costa’s earnings are not going to be as good as expected. At today’s prices I would pick Costa with a five year plus timeframe in mind.
These top ASX shares could also be long-term opportunities for your portfolio at today’s prices.
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Motley Fool contributor Tristan Harrison owns shares of COSTA GRP FPO. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. The Motley Fool Australia owns shares of Xero. The Motley Fool Australia has recommended REA Group 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 Scott Phillips.