In the share market if you can buy-and-hold one or two huge winners over say 20 years or more you’re likely to beat the market and enjoy a blue-chip retirement.
The problem is that identifying the right businesses early is an extremely tough task for even the world’s best investors.
However, winners tend to keep winning and it’s never too late to buy shares in a great business.
The CSL Limited (ASX: CSL) share price is at a record high of $273 today and is now up around 35,000% since its 3-for-1 stock split adjusted 1994 IPO price of just 76.6 cents. And that’s before dividends.
CSL has also been regularly labelled as ‘too expensive’ or ‘overvalued’ while it traded as a public company.
Unfortunately, if you exclude yourself from buying shares in great businesses on the basis that you ‘missed the boat’ you may be excluding yourself from the best returns.
Others to have delivered exceptional long-term performance (i.e. over 15 years or more) for investors on the local market include Computershare Limited (ASX: CPU), REA Group Limited (ASX: REA) and Sonic Healthcare Ltd (ASX: SHL).
So where’s the next huge winner?
Although it’s impossible to identify businesses with potential to return as much as 35,000% some of the ‘born in the cloud’ software businesses in the U.S. look to have a lot of potential.
For example they could easily quadruple in value or more over a 5 to 10 year period in my opinion. While locally some software-as-a-service businesses also boast big growth potential.
The next 35,000% winner if it exists on the local market is likely to come from the left-field though and you will need to get in at the IPO stage or earlier to have any chance of those kind of life-changing returns.
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Tom Richardson owns shares of CSL Ltd. and REA Group Limited.
You can find Tom on Twitter @tommyr345
The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has recommended Computershare, REA Group Limited, and Sonic Healthcare 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.