The Cochlear Limited (ASX: COH) share price is up around 260% over just the past 5 years from $62.70 to $220.10 today, which goes to show how investing is not rocket science.
Generally, if you buy-to-hold high-quality companies that are likely to grow their free cash flow and dividends over the long term you're likely to generate decent returns.
Warren Buffett for example has made an $85 billion fortune just by buying to hold 'blue chip' type businesses that boast pricing power and some kind of moat or competitive advantage. One recent example being Apple Inc.
If Buffett were Australian and running his SMSF I expect one business he'd also like the look of is hearing device manufacturer Cochlear.
As a market leading business with a competitive advantage via its patented technology it boasts a decent long-term profit growth outlook.
On June 10 the analysts at Goldman Sachs took a look at the business and slapped a buy rating and $209 12-month share price target on it. That is based on it selling for 26.1x the next 12 months' EV/ EBITDA, which is high but in line with levels the business has traded at historically.
As Goldmans notes the business is a: "Market leader in an attractive space. COH commands a leading share (c.58%) in a structural growth market which is characterized by attractive demographics, relatively favourable pricing, substantial penetration upside and high barriers to entry."
Generally you won't find many companies on the S&P/ ASX200 (ASX: XJO) that boast these kinds of qualities and even though the stock is trading at $220 today and above Goldman's "12 month share price target" it should be on investors' watch lists to own in my opinion.
Other leading healthcare businesses in Australia include CSL Limited (ASX: CSL) and ResMed Inc. (ASX: RMD). Or as a more speculative alternative you could consider researching Nanosonics Ltd (ASX: NAN) or Pro Medicus Limited (ASX: PME).
