There are some S&P/ASX 200 Index (ASX: XJO) shares that manage to keep growing over the long-term.

2020 has been a difficult year for many businesses, but there are some that manage to regularly generate growth.

Here are three businesses:

Bapcor Ltd (ASX: BAP)

Bapcor is the leading auto parts business in Australia and New Zealand. Despite a blip through the worst of COVID-19, Bapcor continues to grow in FY21.

In the 2021 financial year to the end of November 2020, group revenue was up approximately 26%.

Bapcor said it’s achieving operating leverage from lower expenses in areas such as travel and other areas of discretionary expenditure, as well as lower interest rates and the contribution Truckline, which wasn’t in last year’s comparative period.

For the first half of FY21, Bapcor is expecting revenue growth of at least 25% compared to the prior corresponding period. Net profit after tax (NPAT) growth is expected to increase by at least 50%.

Bapcor said that trade and wholesale make up around 80% of the business, and traded-focused businesses usually perform well in difficult economic conditions. This is showing through with Bapcor’s current performance.

The ASX 200 share said that the changes it has made in its retail businesses helped grow retail revenue grow by around 40% over the prior corresponding period. Some improvements include upgrading its online capabilities as well as changing its product ranges. Bapcor also continues to increase its store count.

Fund manager Wilson Asset Management is a fan of Bapcor, the fundie believes the company has benefited from an increase in domestic travel, reduced usage of public transport and increased second-hand car sales. WAM said that Bapcor has a strong balance sheet and the fund manager believes the company is well placed to make earnings-accretive acquisitions.

Xero Limited (ASX: XRO)

Xero is a cloud accounting software business. It has been growing its subscriber numbers for many years.

The latest result for the ASX 200 share, being the FY21 half-year report, was no exception. Total subscribers grew by 19% to 2.45 million. This helped operating revenue grow by 21% to NZ$409.8 million and annualised monthly recurring revenue increased by 15% to NZ$877.6 million.

Despite already delivering a lot of growth, Xero says that it has ambitions for high-growth whilst being disciplined with costs and targeted allocation of capital. It’s going to keep investing in innovation, new products and customer growth.

A key focus for Xero is the UK, which is a much bigger market than Australia. In the HY21 result its UK subscriber numbers grew by 19% to 638,000 with revenue growing by 33%.

Brickworks Limited (ASX: BKW)

Brickworks is a business that has been growing for decades. It started out as just a brickmaker in Australia, but now it has a diversified portfolio of different building product businesses. Its other products that it’s involved with include paving, masonry, precast, roofing and cement.

The ASX 200 company has expanded recently by acquiring three brickmakers in the US, including Glen Gery. Brickworks is now the leading brickmaker in the north east of the US and it has plans to grow the US business, whilst also improving efficiencies and margins.

A key part of Brickworks’ asset value is its holding of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares. It owns around 40% of Soul Patts, which is a diversified investment conglomerate which is invested in sectors like telecommunications, resources, listed investment companies (LICs) and financial services.

Another part of the Brickworks business is its growing industrial property trust that it owns half of, along with joint venture partner Goodman Group (ASX: GMG). This trust continues to build new properties for prospective tenants, like Amazon, which should grow the value of the trust and increase the rental profits.

At the current Brickworks share price it has a grossed-up dividend yield 4.3%.

More reading

• These were the best performers on the ASX 200 last week
• These were the worst performers on the ASX 200 last week
• ASX 200 rises on Christmas Eve
• ASX 200 up 0.5%: BHP Samarco update, A2 Milk’s acquisition, Credit Corp rockets
• 10 incredible quotes that sum up investing in 2020

Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of and has recommended Bapcor, Brickworks, and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

When considering iconic global brands to invest in, Nike (NYSE: NKE) and lululemon athletica (NASDAQ: LULU) are certainly two of the first that come to mind. The organizations generated bountiful success for shareholders over the years and are well set up to continue doing so.

Which is the better investment? Upon examination, it is abundantly clear that both are fantastic options. Here’s why:

Nike’s promising transition

In Nike’s most recent quarter, sales grew by 9% with earnings growing 11% — both year over year. On the surface, this growth seems somewhat modest. When considering many of Nike’s wholesale partners (department stores) are operating under capacity restrictions or closed altogether, this growth becomes much more impressive.

Nike’s digital sales grew by 84% year over year, powered by triple-digit growth in North America. This outsized expansion more than offset the pain Nike experienced from restrictions on wholesalers and its own brick-and-mortar stores.

What does this successful pivot to digital mean?

In a normalized business environment, the company earns a roughly 10% higher gross margin on digital sales versus sales transacted via wholesale. If any of this shift has staying power, it should therefore result in meaningful profit gains as the world slowly goes back to normal.

While there is no guarantee this will be the case, the company is confident it can maintain its digital momentum. While Nike today earns roughly 30% of its total revenues through digital channels, CEO John Donahoe expects that number to approach 50% in the coming years. If this forecast turns out to be accurate, it should be a very positive trend for investors.

Donahoe has executive experience with three successful technology companies (ServiceNow, eBay, and PayPal Holdings), offering investors good reasons to think he can continue executing a digital transformation at the helm of Nike.

Lululemon is thriving

Lululemon is more expensive than Nike on a price-to-earnings basis, and for good reason. In its most recent quarter, the company grew sales by 22% and profit by nearly 15%; this was despite similar pandemic-related retail restrictions that hurt Nike’s operations. CFO Meghan Frank directly attributed company growth to increased traffic in Lululemon’s digital operations.

LULU PE Ratio (Forward) data by YCharts

For context, the clothing company’s direct sales (which include digital sales) now make up 42.8% of total revenues vs. 26.9% just last year. Clearly, Lululemon’s focus has shifted rapidly due to COVID-19, and it’s paying off.

While some companies are struggling to stay afloat and maintain shareholder returns amid COVID-19, Lululemon managed to initiate a share buyback program of up to $500 million. This does represent roughly 1% of the current market cap, but is a great sign regardless.

Beyond finding success in e-commerce, Lululemon officially expanded into in-home fitness with its acquisition of MIRROR for $500 million. MIRROR offers group and one-on-one floor workouts from the home and plans to broaden its offerings into things like meditation with Lulu’s resources.

Lululemon prides itself on offering its fans compelling omni-channel experiences. This purchase allows it to broaden those offerings by adding connected fitness to the mix. With direct competitors like Peloton Interactive trading at 460 times forward earnings (nearly five times more expensive than Lululemon), any success realized with MIRROR offers Lululemon and its shareholders another promising leg of potential returns.

Both are great options

While investing is sometimes a process of choosing one comparable company over another, I do not think you need to do so in this case. Both Nike and Lululemon are performing exceptionally well and are poised to continue doing so for years to come.

Investors can feel confident going with either company — neither will be going out of style anytime soon.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• 3 things you’ll want to know when Nike announces earnings

Bradley Freeman has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Nike, PayPal Holdings, Peloton Interactive, and ServiceNow, Inc. The Motley Fool Australia has recommended Nike. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Warren Buffett has a long track record of capitalising on market downturns. Over recent decades he has successfully bought a range of high-quality companies when they trade at low prices. In doing so, he has become one of the most successful investors of all time.

With a stock market crash never far away, adopting a similar approach could be very profitable. As such, having some cash available and identifying high-quality companies prior to a market decline could be a worthwhile move.

The prospect of a stock market crash

There have been numerous market downturns during Warren Buffett’s investing career. In fact, they take place fairly regularly, with no bull market ever having lasted in perpetuity. This means that investors will inevitably have the chance to buy high-quality companies at cheap prices at some point over the coming years. During their lifetime, there are likely to be a number of buying opportunities caused by market falls.

In the long run, following a strategy of buying shares during a market crash could be very profitable. It means that an investor essentially purchases stocks at prices that undervalue their long-term prospects. Since every stock market crash has been followed by a return to previous record highs, it allows an investor to use market cycles to their advantage. The end result, as Buffett has shown in his career, is often market-beating returns that have a positive impact on an investor’s financial situation.

Following Warren Buffett into high-quality stocks

Of course, Warren Buffett does not simply buy cheap stocks during a market crash. Rather, he analyses industries and identifies the best companies. Clearly, what determines the best shares is very subjective. However, for Buffett it usually entails a strong competitive advantage that allows a company to earn higher margins and deliver a more resilient performance during challenging periods.

Certainly, such businesses could experience difficult operating conditions caused by a weak economic outlook that prompted a market downturn. However, their relatively high quality means they are likely to survive a period of weaker sales growth. They may even be able to expand their market presence and grab market share at the expense of weaker rivals. The end result could be higher profits and a rising share price in the long run.

Preparing for the next stock market crash

Warren Buffett seems to be in a state of constant preparedness for the next market crash. His large cash position and analysis of companies means he is ready to pounce on high-quality businesses when they trade at low prices.

While many investors may be feeling upbeat about the stock market’s outlook right now, a market crash can come out of nowhere. By preparing now and using it to their advantage, investors can follow in Buffett’s footsteps and obtain higher returns than the wider stock market over the long run.

More reading

• These were the best performers on the ASX 200 last week
• These were the worst performers on the ASX 200 last week
• 3 top small cap ASX shares to buy
• Are these 2 men vying to be the ASX’s Warren Buffett?
• Why I think today’s cheap dividend stocks can double in the next 10 years

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Last week the S&P/ASX 200 Index (ASX: XJO) ran out of steam and just fell short of making it eight successive weeks of gains. The benchmark index edged 10.7 points or 0.2% lower to end at 6,664.8 points.

Thankfully, not all shares dropped with the market. Some even managed to record very strong gains.  Here’s why these were the best performing ASX 200 shares last week:

Credit Corp Group Limited (ASX: CCP)

The Credit Corp share price was the best performer on the ASX 200 last week with an 18.5% gain. Investors were fighting to get hold of the debt collector’s shares after it announced a binding agreement to acquire the Australian Purchased Debt Ledger (PDL) book of Collection House Group Limited (ASX: CLH). Credit Corp has agreed to pay a total consideration of approximately $160 million plus the provision of a short-term loan of $15 million, which is expected to be fully repaid within 9 months.

Smartgroup Corporation Ltd (ASX: SIQ)

The Smartgroup share price was some way behind as the next best performer with a 9.8% gain. The catalyst for this was the salary packaging and novated leasing company releasing its guidance for FY 2020. Smartgroup revealed that it is expecting to report an adjusted net profit after tax before amortisation of $65 million. While this is down almost 20% from a year earlier, it appears to be a lot better than many investors were expecting.

Challenger Ltd (ASX: CGF)

The Challenger share price was on form and jumped 8.5% higher last week. This was driven by news that the annuities company has entered into an agreement to acquire MyLifeFinance for $35 million. MyLifeFinance is an Australian-based customer savings and loans bank, which is owned by Catholic Super. Challenger believes the acquisition is “highly strategic” and allows it to “significantly expand” its secure retirement income offering.

A2 Milk Company Ltd (ASX: A2M)

The a2 Milk share price rebounded strongly from a heavy decline a week earlier and rose 8%. This appears to have been down to bargain hunters swooping in to buy shares on the belief they were oversold last week following its earnings guidance downgrade. In addition to this, late in the week the company revealed that it has entered into a binding agreement to acquire a 75% interest in dairy nutrition business Mataura Valley Milk.

More reading

• These were the worst performers on the ASX 200 last week
• 2 ASX growth shares to buy when the market reopens
• ASX 200 rises on Christmas Eve
• ASX 200 up 0.5%: BHP Samarco update, A2 Milk’s acquisition, Credit Corp rockets
• Why the Credit Corp (ASX:CCP) share price is surging 19% higher today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk and Challenger Limited. The Motley Fool Australia has recommended SMARTGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) was unable to make it eight successive weeks of gains and slipped lower last week. The benchmark index fell 10.7 points or 0.2% to end at 6,664.8 points.

While a number of shares dropped lower with the market, some fell more than most. Here’s why these were the worst performing ASX 200 shares last week:

AGL Energy Limited (ASX: AGL)

The AGL share price was the worst performer on the ASX 200 last week with an 8.8% decline. Investors were selling the energy company’s shares after it downgraded its guidance. AGL now expects its net profit after tax to be in the range of $560 million to $660 million this year. This is down from its prior guidance of $500 million to $580 million and represents an 11% reduction at the midpoint. Weak wholesale prices are partly to blame for its underperformance.

Nearmap Ltd (ASX: NEA) 

The Nearmap share price wasn’t far behind with a 7.7% decline last week. This is despite there being no news out of the aerial imagery technology and location data company. However, a week earlier, analysts at Macquarie downgraded the company’s shares to a neutral rating and cut the price target on them to $2.40. Its analysts suspect that a rotation to value and cyclical stocks could weigh on Nearmap’s shares in the near term.

Resolute Mining Limited (ASX: RSG) 

The Resolute share price was out of form and dropped 6.7% over the four days. This appears to have been driven by a spot of weakness in the gold price last week. It wasn’t just the Resolute share price dropping lower. A number of other gold miners also recorded disappointing declines. This led to the S&P/ASX All Ordinaries Gold index losing 3% of its value last week.

AMP Ltd (ASX: AMP)

The AMP share price dropped 5.9% lower last week. This is despite there being no news out of the financial services company. However, prior to last week, the AMP share price was up over 30% since the start of November. This could have led to some investors taking a bit of profit off the table ahead of the Christmas break.

More reading

• ASX 200 rises on Christmas Eve
• ASX 200 up 0.5%: BHP Samarco update, A2 Milk’s acquisition, Credit Corp rockets
• 10 incredible quotes that sum up investing in 2020
• Iron ore prices poised to hit US$180 next month: Westpac
• 5 things to watch on the ASX 200 on Thursday

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 Nearmap Ltd. The Motley Fool Australia has recommended Nearmap Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are some top small cap ASX shares out there to consider for an investment portfolio.

A smaller business may have more growth potential because it’s earlier on in its growth journey.

Here are three small cap ASX share ideas:

Over The Wire Holdings Ltd (ASX: OTW)

According to the ASX, Over The Wire has a market capitalisation of approximately $250 million.

Fund manager NAOS Small Cap Opportunities Company Ltd (ASX: NSC) is a fan of this business. It has various segments including a national voice network, public cloud, cyber security services and on-demand cloud connectivity. The company also recently acquired Digital Sense, which mostly provides services to large and government clients. Over 90% of Digital Sense’s revenue is recurring in nature.

The fund manager’s thinking with Over The Wire is that it will be able to demonstrate to potential clients that it has a wide array of services and help businesses that have complex needs.

Over The Wire has made two acquisitions recently which, together, could increase the earnings before interest, tax, depreciation and amortisation (EBITDA) by $14 million over the next two years.

Naos thinks that the small cap ASX share could have a normalised run-rate of more than $35 million in FY22 which could mean significant free cash flow generation and could see Over The Wire command a premium EBITDA multiple.

According to Commsec, at the current Over The Wire share price it’s valued at 17x FY23’s estimated earnings.

City Chic Collective Ltd (ASX: CCX)

According to the ASX, City Chic has a market capitalisation of $911 million.

City Chic is a global omni-channel retailer that specialises in plus-size women’s apparel, footwear and accessories. It has a number of brands including City Chic, Avenue, CCX, Hips & Curves and Fox & Royal. It has a network of 96 stores across Australia and New Zealand, websites operating in Australia, New Zealand and the US, marketplace and wholesale partnerships with major US retailers such as Macys and Nordstrom, and a wholesale business with European and UK partners such as ASOS and Zalando.

Fund manager Chris Prunty from QVG Capital thinks that the e-commerce theme will continue to grow after COVID-19 has passed. For a business like City Chic, the fashion ASX share’s ability to sell products online underlines its ability to build a market-leading position for itself.

The small cap ASX share recently announced an acquisition. It’s going to buy UK-based plus-size brand Evans from Arcadia Group. Evans’ e-commerce and wholesale businesses generated £26 million (A$46 million) of sales for the financial year to August 2020. However, the acquisition doesn’t include the physical store network.

Management are excited by the opportunity to directly expand into the UK market which may have a total addressable market of $9 billion.

At the current City Chic share price, it’s valued at 27x FY23’s estimated earnings according to Commsec.

Nick Scali Limited (ASX: NCK)

Nick Scali has a market capitalisation of $772 million according to the ASX.

Fund Manager Matt Williams from Airlie Funds thinks Nick Scali is going to benefit from a lower unemployment rate and consumers could continue to benefit from the government stimulus.

A couple of months ago the small cap ASX share released a trading update which said that its total sales orders for the first three months of FY21 were up 45% on the previous year and this trend continued through October. Excluding store closures in Melbourne and Auckland, comparable store sales orders went up 59% in the first quarter.

Online orders were also up 47% in the first quarter of FY21 and it expects the earnings before interest and tax (EBIT) contribution from online to be higher in FY21 than previously expected.

Nick Scali is now expecting net profit after tax in the first half of FY21 to grow by 70% to 80%.

More reading

• Top brokers name 3 ASX shares to buy today
• Why Bigtincan, Over the Wire, Resolute, & Uniti shares are dropping lower
• Here’s what is dragging the Over the Wire (ASX:OTW) share price lower
• The City Chic (ASX:CCX) share price has been tipped to jump 21% higher from here
• Here’s why this fundie thinks City Chic (ASX:CCX) is an attractive ASX share

Tristan Harrison owns shares of NAO SMLCAP FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Over The Wire Holdings Ltd. The Motley Fool Australia has recommended Over The Wire Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Warren Buffett – chair and CEO of Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) – is one of the most successful and famous investors of all time.

He has become famous for steering Berkshire to success after success over the past near-seven decades. Over that time, Class A Berkshire shares have appreciated from roughly US$12.50 in 1964 to US$335,779 today.

Part of Berkshire’s success has no doubt been its rather unique structure. Unlike most companies in the top echelons of the US share market, Berkshire is a conglomerate. It owns massive stakes in a wide range of businesses, including Coca-Cola Co (NYSE: KO), American Express Company (NYSE: AXP) and (more recently) Apple Inc (NASDAQ: AAPL). It also owns a massive portfolio of businesses outright. These include Duracell, Dairy Queen and Geico.

Many companies have attempted to emulate Buffett’s strategy, none with quite the level of success though. But there have been recent signs that 2 Aussie fund managers are having a go as well.

Normally, a fund manager’s modus operandi is to buy small portions of shares of successful businesses, much like we ordinary retail investors do. Just like an ASX retail investor might spread their money across a range of blue chip shares, a fund manager might have 10, 20 or even 100 different positions. These positions would be larger in scale than those of a retail investor, but the same principle applies.

2 candidates for the ‘ASX’s Warren Buffett’

But 2 ASX fund managers have recently shown through their actions that they might be trying a different, more Buffett-esque approach.

Last week, we found out that ASX fund manager Geoff Wilson had put in a bid to acquire in full the shares of ASX telecom company Amaysim Australia Ltd (ASX: AYS) through his Listed Investment Company (LIC) WAM Capital Limited (ASX: WAM).

Not shares of Amaysim, but Amaysim period. WAM Capital does not usually do business this way. This LIC holds a wide portfolio of at least 20 different ASX shares, most recently of which included Elders Ltd (ASX: ELD) and Flight Centre Travel Group Ltd (ASX: FLT). For WAM, this looks set to be the first acquisition of an entire listed ASX company outside the fellow fund manager space.

Just a few days later, we were treated to the news that another ASX fund manager, Magellan Financial Group Ltd (ASX: MFG), is making a similar move. Magellan has reportedly entered into an agreement to acquire a full 10% of the private fast-food chain Guzman y Gomez (GYG). GYG is not currently a public company, but there have been recent stirrings of an upcoming IPO. The deal will set Magellan back $86.8 million in cash.

These moves are somewhat unusual for ASX fund managers, and yet here we are. They are also reminiscent of Warren Buffett’s methods of bringing businesses into his fold.

Will these moves work out for Magellan or WAM? That remains to be seen. But it’s not hard to see where they are getting their inspiration. Who knows, perhaps in a decade we will be calling Mr Wilson and Magellan’s Hamish Douglass the ‘ASX’s Warren Buffett’.

More reading

• 3 ASX 200 shares that keep growing the dividend
• ASX 200 drops over 1%
• 2 reasons why the Magellan (ASX:MFG) share price is attractive
• Why the Magellan (ASX:MFG) share price is on watch today
• Magellan (ASX:MFG) launches new ETF offerings

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Berkshire Hathaway (B shares) and recommends the following options: short January 2021 $200 puts on Berkshire Hathaway (B shares) and long January 2021 $200 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares), Elders Limited, and Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Buying today’s cheap dividend stocks could be a very profitable move over the next 10 years. Not only do they offer the opportunity to make an attractive passive income, they could also deliver high capital returns.

Their low valuations and increasing popularity in a low interest rate environment could even mean that they double in price over the next decade. As such, building a diverse portfolio of income shares today could be a worthwhile idea. 

Cheap dividend stocks with capital growth potential

Despite the stock market recovery in 2020, there are a wide range of cheap dividend stocks available to buy today. In many cases, they have dividend yields that are significantly higher than their long-term averages. This suggests that they could offer wide margins of safety that provide scope for capital growth over the long run.

The past performance of the stock market shows that company valuations generally revert to their long-term averages following bear markets. Certainly, this may take time in some cases – especially where companies face challenging near-term operating conditions. However, dividend shares with solid finances and affordable shareholder payouts may be able to overcome difficulties in the short run to produce impressive returns in the coming years.

The increasing popularity of dividend shares

One factor that could have a positive impact on the valuations of today’s cheap dividend stocks is their income appeal on a relative basis. Investors who are seeking to obtain a worthwhile passive income in 2021 are unlikely to have much success elsewhere. High property prices have squeezed yields, while low interest rates have pushed income returns on bonds and cash to extremely low levels.

As such, demand for income shares could increase over the coming months and years. This may push their prices higher, resulting in capital gains for investors. And, with interest rates set to remain at low levels for a prolonged period of time due to economic uncertainty, the long-term outlook for today’s cheap dividend stocks could continue to improve.

Doubling an investment in dividend shares over the next decade

A 100% return on today’s cheap dividend stocks over the next decade may sound unlikely to some investors at the present time. After all, risks such as political instability and coronavirus are expected to persist in 2021.

However, a 100% return in 10 years requires an annual growth rate of around 7%. Given that the stock market has produced an annualised total return of around 8% in the past, a 7% return seems very achievable. It could even be argued that the low share prices of many dividend stocks mean that their returns could be above the long-term market average in the coming years. This may even allow an investor to double their money over a shorter timeframe than a decade as a stock market rally takes hold.

More reading

• Invest like Warren Buffett and buy and hold these ASX shares in 2021
• 5 exciting small cap ASX shares to watch in 2021
• 2 outstanding ETFs for ASX investors to buy
• 5 fantastic ASX shares to buy in 2021
• How I’d invest in REIT stocks to earn a passive income

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Legendary investor Warren Buffett is a big advocate of buying and holding shares. It is a strategy he has used with great effect to amass his vast fortune over the last six decades.

The good news is that there is nothing to stop readers from following in his footsteps and replicating his investment style.

But which shares would be good buy and hold options? Listed below are two to look closer at:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

This pizza chain operator is targeting strong growth over the long term. At the end of FY 2020, the company was operating 2,668 stores across Australia, New Zealand, Belgium, France, the Netherlands, Japan, Germany, Luxembourg, and Denmark.

While this might sound like a huge store network, management believes it still has a significant runway for growth in the future. The company is aiming to more than double its network to 5,500 stores by 2033. It is also aiming to grow its same store sales by 3% to 6% per annum over the medium term.

If it successfully delivers on these objectives, then the combination of organic and inorganic growth could underpin solid sales growth over the long term.

Goldman Sachs currently has a buy rating and $88.00 price target on its shares.

Zip Co Ltd (ASX: Z1P)

Zip has been a very strong performer in 2020. It has delivered very impressive sales, customer, and merchant growth over the last 12 months. This has been driven by its successful international expansion, the growing popularity of buy now pay later as a payment method, declining credit card usage, and the seismic shift to online shopping.

In addition to this, the company has supported its growth through the expansion of its product offering. This includes launching Zip Business and its Tap & Zip product. It also just raised $120 million via an institutional placement to support its growth.

One broker that appears very positive on the company’s future is Morgans. Its analysts recently reaffirmed their add rating and put a $8.89 price target on its shares.

More reading

• 3 of the best ASX shares to buy right now
• Here’s why the Zip (ASX:Z1P) share price is in focus today
• ASX 200 down 0.85%: ANZ CFO resigns, tech shares tumble, iron ore jumps
• Is the Zip (ASX:Z1P) share price a buy yet?
• New BNPL enters ASX: How it promises to be different

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 ZIPCOLTD FPO. The Motley Fool Australia has recommended Domino’s Pizza Enterprises Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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At the small end of the Australian share market, there are a number of companies with the potential to grow materially in the future.

Five that investors might want to get better acquainted with are listed below. Here’s what you need to know about them:

Alcidion Group Ltd (ASX: ALC)

Alcidion is an informatics solutions company. It provides software that has been designed to improve the efficacy and cost of delivering services to patients and reduce hospital-acquired complications. Demand for its software has been increasing and has led to a number of major contracts with healthcare institutions in the UK.

Bigtincan Holdings Ltd (ASX: BTH)

Bigtincan is a provider of enterprise mobility software. The company’s software allows sales and service organisations to increase sales win rates, reduce expenditures, and improve customer satisfaction. This is achieved through improved mobile worker productivity. It has a large number of blue chips using its platform, including banking giant Australia and New Zealand Banking GrpLtd (ASX: ANZ) and Nike.

IntelliHR Ltd (ASX: IHR)

IntelliHR is a cloud-based human resources and people management platform provider. It has been growing very strongly this year. For example, during the first five months of FY 2021, IntelliHR revealed an impressive 148% increase in subscriber numbers. As a result, it now has almost 30,000 contracted subscribers on its books. This has underpinned similarly strong revenue growth. As of its last update, the company’s contracted annual recurring revenue (ARR) was up 81.3% to $2.8 million.

Pointerra Ltd (ASX: 3DP)

Another small cap to look at is Pointerra. It is a growing technology company with a focus on the commercialisation of 3D geospatial data. Pointerra’s software allows users to manage, visualise, and share large digital 3D datasets. This software is able to extract vital information from the data that would otherwise take many hours to do. Management estimates that its market opportunity is currently worth a massive $500 billion annually.

Whispir (ASX: WSP)

Whispir is a software-as-a-service communications workflow platform provider. Its software platform allows businesses and governments to deliver actionable two-way interactions at scale using automated multi-channel communication workflows. Management believes its platform revolutionises customer engagement, business resilience, and operational communications process.

More reading

• 3 top ASX shares to buy in 2021
• Why Bigtincan, Over the Wire, Resolute, & Uniti shares are dropping lower
• Here’s why the Bigtincan (ASX:BTH) share price is dropping lower
• 2 exciting small cap ASX shares growing rapidly
• Why Afterpay, Alcidion, Eagers Automotive, & Pacific Smiles are storming higher

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 and recommends BIGTINCAN FPO and Whispir Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Alcidion Group Ltd and Pointerra Limited. The Motley Fool Australia has recommended Alcidion Group Ltd, BIGTINCAN FPO, Pointerra Limited, and Whispir Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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