When quizzed on how long an investor should hold a company in his or her portfolio, Warren Buffett famously said: "The ideal holding period is forever".
So if you had to invest in anything for 'forever', what would it be?
Most Australians would probably say property.
And there are merits to holding property (particularly a house) over the long run.
Firstly, it's tangible. You can touch, feel and maybe even smell it. You can also spend a lot of money on it.
Second, a property is unique. Your house is different to my house.
Third, usually you can earn rental income – regardless of how low the yield may be.
However, my answer to the 'forever' question would be to buy shares in a great company, or buy an index fund that tracks the entire sharemarket.
To me, it makes more sense to do that because the sharemarket has performed better than property as a whole, and there is less time commitment required to hold shares.
3 forever stocks I'd buy today
If I had to pick three ASX stocks to buy today with a view to holding them forever, the following three healthcare businesses stand out.
- CSL Ltd (ASX: CSL) is a global leader in blood plasma products and vaccines for a range of serious medical conditions. The unique range of products affords CSL sticky recurring revenues and a durable competitive advantage over the long term. While it pays a relatively small dividend by Australian standards, a recent setback in share price has provided a sound buying opportunity for savvy investors.
- ResMed Inc. (CHESS) (ASX: RMD) is another internationally focused defensive biotechnology business. It develops and distributes devices for the treatment of sleep apnoea and related respiratory disorders. Like CSL, it shares have been sold down in recent months.
- Cochlear Ltd (ASX: COH) completes the trio for the ASX bustling healthcare sector. Like its two peers above, the decades-old maker of implantable hearing aids reports in US dollars due to its global exposure. While Cochlear will continually be challenged by local and international competitors for market share, it reinvests heavily in research and development to maintain its market leading position.
Buy, Hold or Sell
The short-term outlook will likely prove to be a volatile ride for each of these three medical companies. However, I recently bought more shares in each of them for the long-term because they appear good value, are well-run businesses, provide excellent overseas exposure and have strong competitive advantages.
