When it comes to building long-term wealth, few strategies are as effective as buy and hold investing. By focusing on high-quality companies and giving them time to grow, investors can take full advantage of the power of compounding.
This approach not only reduces trading costs and taxes but also allows you to ride out the market's ups and downs without the stress of trying to time your buys and sells.
Simply brilliant
The beauty of buy and hold investing lies in its simplicity. Rather than constantly monitoring the market or chasing trends, investors can concentrate on finding fundamentally strong companies with sustainable competitive advantages, solid management teams, and long-term growth potential.
These businesses tend to weather economic downturns better and emerge stronger when conditions improve. Over time, they can provide both capital appreciation and growing income streams through dividends.
A key benefit of this strategy is that it rewards patience. The longer you hold onto quality stocks, the more you allow them to deliver consistent returns. Even small annual gains can compound into significant wealth over decades.
But which Australian stock could be a great long-term option for ASX investors today? Let's take a look at one leading candidate that analysts love.
A top Australian stock to buy and hold
The stock in question is CSL Ltd (ASX: CSL).
There are a large number of brokers that have become extremely bullish on the biotherapeutics company in recent months.
For example, the team at Goldman Sachs has just initiated coverage on the plasma therapies leader with a buy rating and $325.40 price target. It said:
Our Buy recommendation for CSL is driven by (1) Strong growth in the IG market despite the entry of new drugs (anti-FcRn), (2) CSL market share gains in the IG market, Hemophilia, Hereditary Angiodema (HAE) and influenza vaccines, and (3) Gross Margin accretion driven by operational improvements to its cost base. We believe CSL's valuation multiple de-rate is onerous considering the growth outlook, particularly for IG therapies.
Elsewhere, analysts at Bell Potter recently put a buy rating and $345.00 price target on this Australian stock. They said:
We expect CSL will achieve guidance of "annual double-digit earnings growth" over the mid-term driven largely by the legacy plasma business, Behring, particularly its immunoglobulin sales. While CSL's Seqirus and Vifor business units do face near-term headwinds (reduced flu market demand and generic iron competition), these two units combined only contribute less than a third of total earnings. CSL continues to be a high quality, global operator with a multi-year gross margin recovery well underway to drive earnings expansion. The stock is currently trading at a 12m forward PE 27% and 19% below 5- and 10-year averages, respectively.
