I'm a big fan of buy and hold investing and believe it is the best strategy for generating wealth over the long term.
Legendary investor Warren Buffett is someone that uses this strategy and to great effect. And given the vast fortune he has amassed over the last six decades using this style of investing, it's hard to argue against it.
But which shares would be good buy and hold options? Listed below are two ASX shares which could have the potential to provide investors with strong returns over the long term:
NEXTDC Ltd (ASX: NXT)
NEXTDC is a leading data centre-as-a-service provider. It owns a growing network of world class centres in key locations across Australia. While NEXTDC has been growing at a solid rate in recent years thanks to the shift to the cloud, its growth has gone up a gear over the last 12 months.
This is because the pandemic has led to the shift to the cloud accelerating and underpinned a significant increase in demand for capacity in its data centre. This has supported strong revenue and earnings growth.
Positively, the transition to the cloud still has a long way to go, which should support strong demand domestically throughout the 2020s. In addition, the company has recently opened offices in Singapore and Tokyo. If it expands into these markets, it could provide NEXTDC with a significant runway for growth.
UBS is positive on the company. It has a buy rating and $15.40 price target on its shares.
ResMed Inc. (ASX: RMD)
ResMed could be another great buy and hold option for investors. It is a medical device company with a focus on sleep treatment products. The company has been growing at a consistently strong rate over the last decade and, positively, looks well-placed to continue this form long into the future.
This is due to its world-class, cloud-connected hardware and software solutions and its huge addressable market. Management currently estimates that there are 936 million people with sleep apnoea globally. And as the majority of these sufferers remain undiagnosed, it gives ResMed a significant runway for growth.
In addition to this, the company notes that there are 380 million people who suffer from chronic obstructive pulmonary disease (COPD) and over 340 million people living with asthma. That's another 720 million people that could benefit from ResMed's products.
Morgans is a fan of ResMed. It recently retained its add rating and put a price target of $30.09 on its shares.
