I’m a big advocate of buying and holding shares and believe it is the best strategy for generating wealth over the long term.
Legendary investor Warren Buffett is someone that uses this strategy and given the vast fortune he has amassed over the last six decades, it’s hard to argue against it.
But which shares would be good buy and hold options? Listed below are three ASX shares which I think have the potential to provide investors with strong returns over the long term:
Domino’s Pizza Enterprises Ltd (ASX: DMP)
I think this pizza chain operator would be a great buy and hold option. This is due to the popularity of Domino’s pizzas with consumers, its strong market position, and its expansion plans. Management advised that it is aiming to grow its store network to 5,500 stores by 2033. This will be more than double the 2,668 stores it had at the end of FY 2020. In addition to this, the company has a long track record of same store sales growth. If it continues this trend and delivers on its expansion plans, it should lead to strong earnings growth over the next decade.
Kogan.com Ltd (ASX: KGN)
Another top ASX share to consider as a buy and hold investment is Kogan. Although the ecommerce company’s shares have been on fire this year, I believe they still have long way to run over the next decade. Especially given the shift to online shopping which has accelerated during the pandemic. This trend bodes well for its increasingly popular website and should underpin strong sales growth in the coming years. In addition, Kogan also has a hefty cash balance which it plans to use on earnings accretive acquisitions.
ResMed Inc. (ASX: RMD)
A final share to buy and hold is ResMed. I think the medical device company can be a market beater over the 2020s. This is thanks to its world class products, intuitive software solutions, and rapidly growing ecosystem. In respect to the latter, at the end of FY 2020, ResMed’s digital health ecosystem had grown to over 12 million cloud connectable medical devices. This provides it with strong recurring revenues and a large amount of high quality data. Another positive is its massive market opportunity. Management estimates that there are 936 million people with sleep apnoea globally. I feel this gives ResMed a significant runway for growth over the next decade.
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More reading
- Broker picks best ASX small cap stocks to buy from the reporting season
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- 3 unstoppable ASX shares to hold for the next decade
James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Domino’s Pizza Enterprises Limited, Kogan.com ltd, and ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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