In his most recent letter to shareholders, Warren Buffett wrote about how just a few big winners through the years have contributed materially to the success of Berkshire Hathaway (NYSE: BRK.B).
The Oracle of Omaha explained:
In 58 years of Berkshire management, most of my capital-allocation decisions have been no better than so-so. In some cases, also, bad moves by me have been rescued by very large doses of luck. (Remember our escapes from near-disasters at USAir and Salomon? I certainly do.) Our satisfactory results have been the product of about a dozen truly good decisions – that would be about one every five years – and a sometimes-forgotten advantage that favors long-term investors such as Berkshire.
The good news is that analysts believe there are a couple of powerful ASX shares that have been out of favour this year but could roar again over the coming years.
Which ASX shares could power your portfolio?
As Buffett mentioned above, investors may want to focus on buying quality companies with a long-term view.
Two ASX shares that analysts appear to believe could be quality long-term options are ResMed Inc. (ASX: RMD) and Treasury Wine Estates Ltd (ASX: TWE).
In respect to the former, ResMed is one of the world's leading sleep treatment companies. Its shares have fallen heavily this year due to concerns that weight loss drugs could limit its growth.
Goldman Sachs doesn't believe this will be the case and feels it still has a huge growth opportunity over the next few decades. It notes the following:
[O]n the threat from GLP-1s [weight loss drugs], RMD outlined its estimates of the global OSA TAM through 2050E and highlighted that, at current rates of market growth, RMD penetration would still be <10% by 2050E, even in its 'high pharma impact' scenario.
Goldman has a buy rating and a $25.78 price target on its shares.
What else?
Another ASX share that analysts expect to deliver powerful returns is Treasury Wine.
Morgans is bullish on the wine company following the acquisition of Paso Robles luxury wine business, DAOU Vineyards (DAOU) for US$900 million. It highlights that the "acquisition is in line with TWE's premiumisation and growth strategy and will strengthen a key gap in Treasury Americas (TA) portfolio."
Its analysts also note that "if TWE delivers on its investment case, there is material upside to our valuation." And that's despite the broker already seeing huge upside with its add rating and $14.15 price target.
