One of the ways that Warren Buffett has generated significant wealth over the last six decades is through buy and hold investing.
If the Oracle of Omaha finds a company that he likes, he will invest and not sell shares unless something breaks his investment thesis. The beauty of this strategy is that it allows investors to benefit greatly from compounding.
Compounding explains why a 10% per annum return will turn $10,000 into $11,000 in one year and into ~$26,000 in ten years.
With that in mind, I have picked out two ASX shares that could be great candidates for a buy and hold investment. They are as follows:
Domino’s Pizza Enterprises Ltd (ASX: DMP)
Due to its strong performance in FY 2021 and very bright outlook, Domino’s could be a top buy and hold investment option.
In respect to the former, strong demand for its pizzas in the ANZ, European, and Japanese markets underpinned stellar sales growth during the first half of FY 2021. Domino’s reported a 16.5% increase in total global food sales to $1.84 billion. And thanks to operating leverage, its net profit grew at an even stronger rate of 32.8% to $96.2 million.
Pleasingly, management is expecting an even stronger performance during the second half, which is likely to lead to a bumper profit result in August.
Looking further ahead, Domino’s still has a significant growth runway. For example, at the end of the first half, the company had a network of 2,800 stores. It is now aiming to double this over the next decade. And that’s just from its existing markets. Management is also looking for acquisitions and could expand into new territories in the future to give the company an even larger growth runway.
Analysts at Goldman Sachs are very positive on the company’s future. As a result, the broker recently put a buy rating and $112.60 price target on its shares.
SEEK Limited (ASX: SEK)
Another buy and hold investment option to consider is SEEK. It is of course the leading job listings company in the ANZ region and has a number of growing businesses around the world.
In respect to its local operations, at the end of December, SEEK ANZ had 16 million candidate profiles, 35 million monthly visits, and 160,000 active hirers. This led to the company having almost a third of all placements in the region, which is five times greater than its nearest competitor.
This gives the company a firm foundation to build on over the next decade, which should be supported by its international businesses, which continue to grow.
One broker that is a fan of SEEK is UBS. It currently has a buy rating and $32.00 price target on its shares.
Where to invest $1,000 right now
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Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of February 15th 2021
Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited and SEEK Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.