I think buy and hold investing is one of the best ways for investors to grow their wealth.
To demonstrate how successful it can be, every so often I like to pick out a number of popular ASX shares to see how much a single $20,000 investment ten years ago would be worth today.
This time around I have picked out the four shares that are listed below:
One of the best performers in the healthcare sector over the last decade has been the Cochlear Limited (ASX: COH) share price. It has been a market-beater over the period with an average total return of 15.1% per annum. These strong gains have been driven by the company’s ability to continue to develop industry-leading hearing solutions products and increasing demand due to ageing populations across the globe. Thanks to this, a $20,000 investment in Cochlear’s shares 10 years ago would be worth $81,600 today.
The Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) share price has been a very strong performer over the period, averaging a total return of 20.5% per annum. The catalyst for this outperformance was the success of the company’s products and systems for use in respiratory care, acute care, and the treatment of obstructive sleep apnoea. A combination of solid demand and product innovation has led to the company growing its sales and earnings by a CAGR of 11% and 15.6%, respectively, over the last decade. A $20,000 investment in its shares in 2009 would now be worth almost $130,000.
Thanks partly to the success of its Smiggle and Peter Alexander businesses in recent years, the Premier Investments Limited (ASX: PMV) share price has been one of the better performers in the retail sector over the last 10 years. During this time it has provided its shareholders with an average total annual return of 12.2%. This means a $20,000 investment in its shares would now be valued at ~$63,200.
Finally, despite being classed by many as a boring infrastructure investment, the Sydney Airport Holdings Pty Ltd (ASX: SYD) share price has provided exciting returns for investors over the period. Its near monopoly position, increasing tourism, and low rates have led to the airport operator’s shares generating a total average return of 17.6% per annum. This would have turned a $20,000 investment into $101,000 over the last 10 years.
But that was then and this is now. So which shares could generate big returns in the future?
My money would be on these buy-rated stocks. Not only have they got outstanding growth potential and strong business models, they are trading at very cheap prices.
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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 Cochlear Ltd. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited and Sydney Airport Holdings Limited. The Motley Fool Australia has recommended Cochlear 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.