Most investors know there's no such thing as a risk-free stock. Markets move in cycles, companies face disruption, and short-term sentiment can be brutal.
But every now and then, you come across businesses with such strong positions, sticky revenues, and long-term tailwinds that they look like permanent portfolio candidates.
If I had to narrow it down, these are two Australian stocks I'd be comfortable holding forever. Here's what you need to know about them:
ResMed Inc (ASX: RMD)
The first Australian stock I would gladly hold forever is ResMed. It is a global leader in sleep apnoea devices and cloud-connected solutions that help millions of patients manage their sleep and breathing disorders. The company dominates its market, competing with only a handful of global players, and continues to expand its reach through innovation and new products.
The long-term case for ResMed is compelling. Sleep apnoea remains significantly underdiagnosed worldwide, meaning growth potential is enormous. In fact, it is estimated that there are over 1 billion sufferers of the sleep disorder globally. And with education increasing and smart devices now capable of diagnosing sleep apnoea, ResMed looks well-placed to benefit.
Beyond devices, ResMed's digital health platform gives it recurring revenue streams and deeper relationships with patients and healthcare providers. And with robust margins, strong cash generation, and a global footprint, ResMed looks like a stock that can keep compounding value for decades.
Earlier this week, Citi put a buy rating and $51.00 price target on its shares.
TechnologyOne Ltd (ASX: TNE)
Another Australian stock that I would hold forever is TechnologyOne. It is Australia's largest enterprise software company, specialising in cloud-based solutions for government, education, and financial services.
What sets TechnologyOne apart is its focus on sticky products. Once a customer adopts its software, switching costs are high, making revenue streams both recurring and resilient.
The company has also shifted successfully to a software-as-a-service model, driving higher margins and predictable cash flows. Its customer base is expanding steadily, and the move into international markets is adding further growth opportunities.
Management is confident in its outlook and believes it can double its annual recurring revenue (ARR) to $1 billion by 2030. It then sees scope to continue doubling in size every five years. That's the type of company that I want in my portfolio.
The team at UBS thinks it would be a great pick for Aussie investors. Its analysts currently have a buy rating and $42.20 price target on its shares.
