ARB Corporation Limited (ASX: ARB) shares and Reliance Worldwide Corporation Aus P Ltd (ASX: RWC) could offer long-term growth.
3 things to look for in good investments
When I look at a share market investment, there are a few things I like to see in the company:
- Brand power. Having a strong brand enables them to charge a premium for their offering.
- Insider ownership. Having management who own a lot of shares means they have 'skin in the game' – so I would be willing to bet they'll take good care of their investments.
- Growth potential. One way good companies may start out is by focusing on a niche market or country, then expanding. This is easier said than done so when you find a company that is already expanding into new markets successfully, take note.
ARB Corp
ARB Corporation is Australia's leading bullbar and 4×4 accessories company. It is a family company, which is sometimes even better than founder-run companies because the managers have an ingrained ultra-long-term investment philosophy.
ARB Corporation invests heavily in itself, designing new products which are not only better-looking but safer for drivers. It is also investing abroad, taking its unique design and sales overseas.
I don't own ARB Corporation shares because they appear expensive and the business is cyclical. After all, in a recession, are you going to buy a $2,500 bullbar or six months' worth of bread and milk for your family?
I'm willing to bet that when times get tough I'll buy ARB shares at a better valuation.
Reliance Worldwide
Reliance Worldwide is little known and a relatively recent addition to the ASX.
The company creates water control and plumbing solutions like 'Sharkbite', a time and money saver for plumbers. The company has operations locally and abroad, with sales success in the USA.
Pleasingly, Reliance Worldwide has insider ownership. Chairman Jonathan Munz has been involved with Reliance Worldwide since his family bought it in 1986. He holds around 157 million shares.
Reliance Worldwide shares appear to be priced fairly. Meaning, it may pay to be patient and wait for a lower price. Or, at the very least, ask yourself: how will this company outperform expectations?
Foolish Takeaway
ARB Corporation and Reliance Worldwide shares should be on your watchlist, at least. In my opinion, both companies are worthy of closer inspection for any investor looking to make investments for 10 years or more.
