When I look for buy-and-hold investments, I'm not necessarily chasing the fastest quarterly growth.
I'm looking for businesses with large addressable markets, recurring revenue, and operating leverage that can play out over many years.
Right now, three ASX stocks stand out to me for those reasons.
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TechnologyOne Ltd (ASX: TNE)
TechnologyOne might not grab headlines like some global SaaS giants, but I think it's one of the most consistent software businesses on the ASX.
The company provides enterprise resource planning (ERP) software to government, education, and corporate customers. These are mission-critical systems. Once embedded, they are rarely replaced.
What I like most is the quality of earnings. Recurring revenue continues to rise as the company transitions customers to its SaaS platform. Churn is low, margins are strong, and management has a clear long-term strategy.
TechnologyOne has also been expanding into the UK market, which gives it a new growth runway beyond Australia and New Zealand. If it can replicate its domestic success offshore, earnings could scale meaningfully over the next decade.
For me, this is a classic compounding business: steady, profitable, and quietly growing.
Catapult Sports Ltd (ASX: CAT)
Catapult operates in a very different market, but I think the long-term opportunity is compelling.
The company provides performance analytics and wearable technology to professional and collegiate sports teams globally. Its platform integrates coaching, scouting, athlete monitoring, and analytics.
Among its customers are many of the most successful sports teams from across the globe.
What makes Catapult attractive to me is the recurring revenue model. As teams adopt the platform, they tend to stick with it, and average contract values can expand over time as additional modules are added.
The addressable market is still relatively underpenetrated, particularly across smaller leagues and international markets. If Catapult continues converting teams and scaling its SaaS metrics, I believe earnings growth could accelerate.
It's not without risk, but as a smaller-cap growth name, I see genuine upside if execution continues.
Megaport Ltd (ASX: MP1)
Megaport gives exposure to the ongoing shift toward cloud computing and software-defined networking.
The company enables businesses to connect directly to major cloud providers through a flexible, on-demand platform. As enterprises move more workloads into the cloud, demand for scalable, low-latency connectivity should grow.
Megaport has faced volatility and operational resets in the past, but I think the underlying industry tailwinds remain intact. Cloud adoption is still expanding, and enterprises increasingly value flexibility over fixed infrastructure.
If management can execute consistently and improve profitability while continuing revenue growth, I believe sentiment could shift significantly. It also boosted its addressable market with the recent acquisition of Latitude.
Over a long-term horizon, I think the combination of structural demand and operating leverage could make this an attractive buy-and-hold growth story.
Foolish Takeaway
Buy-and-hold investing works best when the businesses themselves are still growing.
TechnologyOne offers steady, recurring software compounding. Catapult provides scalable sports technology exposure. Megaport taps into cloud and network infrastructure growth.
Each carries risk, but over a 5 to 10-year horizon, I think these growing ASX stocks have the ingredients to become very successful long-term investments.
