When it comes to investing, I have a tendency to look for ASX shares that I can buy and hold for a long period of time rather than trade in and out of positions.
This way, I can benefit from the power of compounding. This is what happens when you generate returns on top of returns. It explains how $10,000 can turn into $26,000 in 10 years if you average a 10% return per annum.
With that in mind, listed below are two ASX shares that I would invest $10,000 into for the long term. They are as follows:
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CSL Limited (ASX: CSL)
The first ASX share that I would invest $10,000 into this month is CSL. It is one of the world's leading biotherapeutics companies with a collection of world-class businesses that includes CSL Behring and Seqirus.
I'm a big fan of the company due to its high-quality portfolio of products, lucrative development pipeline, and huge investment into research and development (R&D). In respect to the latter, every year, CSL reinvests 10% to 12% of its revenue back into its R&D. This saw the company invest over US$1 billion into these activities in FY 2022, ensuring that it has a wide range of potentially lucrative and life-saving therapies destined for commercialisation in the coming years.
And while the company may not be out of the woods just yet with COVID-related margin pressures, management anticipates its margins bottoming during the first half of FY 2023. After which, the normalisation of trading conditions and the company's exciting new Rika plasma collection technology are expected to support margin expansion and solid earnings growth once again.
All in all, I believe CSL's shares could be a quality long-term option for investors.
Technology One Ltd (ASX: TNE)
Another ASX share that I think would be a quality buy-and-hold option right now is enterprise software company TechnologyOne.
I think it is one of the best tech shares on the Australian share market thanks to its high quality and sticky software, which is used by countless businesses and government agencies across Australia and the UK.
In respect to the stickiness of its software, TechnologyOne boasts an ultra-low churn rate of 0.09% of annual recurring revenue (ARR) and a net revenue retention (NRR) of 114%. This means that not only are TechnologyOne's customers sticking around, it is squeezing more revenue from them each year.
Another positive is that the company is currently transitioning its customers to a software-as-a-service offering and ceasing support for legacy software. This shift to higher margin recurring revenues is expected to be supportive of stronger margins in the coming years.
This transition has been going very well and is expected to continue doing so. In fact, management is confident enough to forecast ARR of $500 million by FY 2026. This is almost double its current base ARR of $288 million.
And while TechnologyOne's shares carry a premium valuation, I believe the company's extremely positive outlook justifies this and would be a buyer of them for the long term at current levels.
