Trying to predict what the share market will do next month or even next year is a tough game.
But looking a decade ahead is often where long-term investors can gain an edge. Over that timeframe, short-term noise fades away and the quality of the underlying business really starts to matter.
So, if I were building a portfolio with a 10-year mindset, here are three Australian stocks that I think could deliver the goods.
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NextDC Ltd (ASX: NXT)
NextDC is well-placed to benefit from several unstoppable trends, including cloud computing, artificial intelligence, and the ongoing digitisation of the economy. As more data is created, stored, and processed, demand for high-quality, secure, and well-connected data centres continues to grow.
What makes NextDC particularly compelling is the long-term nature of its customer contracts and the mission-critical role its infrastructure plays. Once a customer is embedded in a data centre ecosystem, switching is costly and complex.
It is no wonder then that the team at Morgans recently upgraded this Australian stock to a buy rating with a $19.00 price target.
ResMed Inc (ASX: RMD)
Another Australian stock to buy and hold for 10 years is ResMed. It has spent decades building a dominant position in sleep apnoea treatment, and the opportunity ahead remains enormous.
There are an estimated one billion people globally suffering from sleep apnoea, with the vast majority undiagnosed. That gives ResMed a massive, underpenetrated market to keep growing into.
With strong margins, recurring revenue, and a global footprint, ResMed has many of the hallmarks of a long-term compounder that can steadily grow earnings over many years.
The team at Macquarie is bullish on its outlook. It has an outperform rating and $49.20 price target on its shares.
TechnologyOne Ltd (ASX: TNE)
Lastly, TechnologyOne could be an Australian stock to buy and hold. It provides enterprise software to governments, councils, and large organisations, sectors that value reliability over experimentation.
Its transition to a software-as-a-service model has delivered highly recurring revenue, strong cash generation, and excellent customer retention. Once embedded, TechnologyOne's systems become deeply integrated into customer operations, making them very sticky. Over a 10-year horizon, that kind of predictable, compounding growth can be incredibly powerful.
In fact, management believes it can double in size every five years. So, if it delivers on this, it could triple in size over the next decade.
UBS is a fan and has a buy rating and $38.70 price target on its shares.
