I believe Investing in the stock market is anything but a short-term pursuit because the market is too volatile and irrational for anyone to predict with certainty.
To quote Warren Buffett one more time: "The best holding period is forever."
Although companies are sometimes unable to meet earnings forecasts or fail to grow their business year-in year-out, in the long term, we can put the chances of success in our favour by investing in established businesses with proven management and sound growth strategies.
In the short term they could (and likely will) encounter rough patches but it's their ability to continue driving shareholder value which makes them the best investments.
For the three reasons above (plus more), I added the following companies to my long-term portfolio because I'm confident they'll grow into stronger and highly profitable businesses, over time.
1. Yellow Brick Road Holdings Ltd (ASX: YBR) is a small diversified wealth management company with a growing branch network throughout Australia. It is headed by Mark Bouris, the founder of Wizard Home Loans and is expected to record its first profit in FY15. With superior customer service, competitive home loan rates and an all-in-one type business model, YBR hopes to steal market share away from the big banks.
2. ADMEDUS FPO (ASX: AHZ) is a junior biotechnology stock which has recently started selling its flagship tissue regeneration technology, Cardiocel, in worldwide markets. With experienced management, renowned scientists and a host of products, ranging from medical devices to immunotherapies, Admedus appears to have a bright future ahead. At $0.13 per share, it has a market capitalisation of $187 million.
3. Bentham IMF Ltd (ASX: IMF) is a litigation funder for cases which exceed $5 million. IMF has been busy forming international partnerships to expand its operations globally. Since cases can be settled at any time, investors who want regular dividend payments and stable earnings growth continue to avoid IMF's shares, which provides an opportunity for long-term shareholders to buy the company's stock at a good price.
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I've owned each of these three companies for a little while but intend to do so for many years. However I think each could still hold potential for new money entering the market. In fact, just last week I topped up on Admedus shares because I still see long-term potential in the company at its current market price, despite rising over 160% in the past year.
However, for those investors who like dividends and growth there's one ASX stock, hidden outside of the S&P/ASX200 Index (ASX: XJO) (INDEXASX: XJO), you should consider adding to your long-term portfolio before any of these.
