What if you could only buy stocks on the condition you couldn't sell them for five years? Would that change your investing strategy, or would you just stop share investing at all?
If you bought a property or a business, you'd try to choose prospective investments that would pay you an above average return over much longer periods like 10 – 20 years. You'd look over property sales histories and trends, or go over the account books of a business for as many years as on record.
Investing should be no different. Foolish investing is very wise in that respect. Price movements are the last thing to consider when picking stocks.
The companies you want to invest in now are the ones you think will be growing and profitable 5 – 10 years from now.
ResMed Inc (CHESS) (ASX: RMD) is a leading producer of breathing aids and respiratory devices in the US. Currently, it is developing new products that can be used by mainstream consumers to monitor, record and analyse sleep, breathing and heart rate patterns in conjunction with mobile apps. E-health is a growing market for fitness and well-being.
SEEK Limited (ASX: SEK), the operator of job search website seek.com.au, still has an overwhelming lead on its competitors and is expanding its employment and training network in Asia to take advantage of highly populated countries with large jobs markets. The company regularly grows earnings in the high double digits.
Packaging producer Amcor Limited (ASX: AMC) had solid half-year earnings growth, partly from its steady pace of acquisitions. After demerging from Orora Ltd (ASX: ORA) in December 2013, the company is focusing on its core businesses and looking for overseas expansion opportunities. Packaging is one industry that grows proportionately with general economic growth.
New business trends, number one market-leading positions and having products that meet the high demand for repeated consumption are some of the factors you can look for to spot long-lasting businesses.
Of these three stocks, I prefer SEEK the most because it's the clear market leader in its industry and is replicating its business in new markets.
