I think buy and hold investing is one of the best ways to grow your wealth.
That's because it allows investors to benefit from the power of compounding.
This is what happens when you earn returns on top of returns. It essentially supercharges your wealth creation.
But not all Australian stocks are necessarily good options for buy and hold investing.
So, let's narrow things down and pick five buy-rated stocks that could be just the ticket for investors. They are as follows:
CSL Ltd (ASX: CSL)
The first Australian stock that could be a great buy and hold option for investors is CSL. It is the biotechnology giant responsible for the CSL Behring, CSL Vifor, and CSL Seqirus businesses.
Bell Potter thinks that the positive outlook for the CSL Behring business makes it a great long-term option. It recently said:
In our view the stock looks undervalued on a PE ratio 18%/8% below 5yr/10yr historical averages and is set for double-digit earnings growth driven by the core Behring division.
Bell Potter has a buy rating and $345.00 price target on its shares.
Nextdc Ltd (ASX: NXT)
Over at Morgans, its analysts believe that the artificial intelligence (AI) megatrend makes NextDC an Australian stock to buy and hold.
It is a growing technology company enabling business transformation through innovative data centre outsourcing solutions, connectivity services, and infrastructure management software. Morgans commented:
Digital Realty recently reported a record sales quarter during which it sold double the data centre capacity of its previous high and about four times more capacity than it usually sells in a quarter. This reinforces our view that the significant demand for cloud computing and AI-related digital infrastructure is going to unpin attractive returns and long-term growth. […] Our preferred exposure is NEXTDC. It has 17 operational data centres in Australia and nearly a dozen under construction or about to be built across Australasia and Asia.
Morgans has an add rating and $20.50 price target on its shares.
ResMed Inc. (ASX: RMD)
Another Australian stock share that could be a great long term option according to analysts is ResMed. It is a sleep disorder treatment company with a huge total addressable market (TAM).
ResMed's CEO, Mick Farrell, recently commented on its huge TAM. He said:
Today, more than 2.3 billion people suffer from major sleep health and breathing issues, the vast majority of which are undiagnosed. By building on our leadership in connected digital health, our 2030 Strategy will further enable us to transform sleep health, breathing health, and health tech at home through world-class products and digital solutions.
Morgans has an add rating and $41.33 price target on its shares.
WiseTech Global Ltd (ASX: WTC)
Goldman Sachs thinks that WiseTech Global could be a great Australian stock to hold.
Its analysts feel that the logistics solutions company is well-placed for strong growth in the coming years. They said:
We believe the significant sell off in WTC presents a compelling opportunity to buy one of Australia's best global growth stories, ahead of an acceleration in its organic earnings growth, at a reasonable valuation.
Goldman has a buy rating and $138.00 price target on the company's shares.
Xero Ltd (ASX: XRO)
Finally, Xero could be an Australian stock to buy and hold. It is a leading cloud accounting platform provider.
Goldman Sachs is very bullish on the company and recently named it as its favourite large cap pick in the technology space. The broker said:
Given the company's pivot to profitable growth and corresponding faster earnings ramp, we see an attractive entry point into a global growth story with Xero our preferred large-cap technology name in ANZ.
Goldman has a buy rating and $201.00 price target on its shares.
