Buying quality shares and holding them over many years might not be an exciting get-rich-quick strategy, but it is a proven strategy that has the potential to generate significant wealth over the long term.
Some of the world’s richest people, such as Warren Buffett, have used this buy and hold strategy to build their fortunes and there is nothing to stop the average investor from doing the same.
With that in mind, here are three shares that I think would be outstanding buy and hold options:
a2 Milk Company Ltd (ASX: A2M)
I think this leading infant formula and fresh milk company could be a great buy and hold option. This is largely down to its expansion in the United States and the increasing demand for its infant formula products in the China market. The latter has been a key driver of growth in FY 2019, leading to the company reporting a 42% increase in revenue for the first nine months to NZ$938 million. Overall, I feel the company is well-placed for further strong growth in FY 2020 and beyond.
ResMed Inc. (ASX: RMD)
ResMed has certainly enjoyed great success over the last decade, but I think the next 10 years could be just as successful for the sleep treatment specialist. This is because the sleep apnoea market is growing every day and there is still a huge number of undiagnosed people that could benefit from its industry-leading treatment options. ResMed is also targeting the use of technology based services to improve its offering. So far this has gone very well and looks set to support the growth of the core business over the long term.
Xero Limited (ASX: XRO)
Xero is one of the world’s leading cloud-based business and accounting software providers. Like the others, it has been an impressive performer again in FY 2019. This has been driven by the winning combination of growth in subscriber numbers and an increase in the average revenue per user. Pleasingly, given the quality and stickiness of its product, its strong pricing power, and its massive global market opportunity, I believe it is capable of continuing to grow at an above-average rate for many years to come. This could make it an ideal buy and hold option for investors today.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended ResMed Inc. 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.