2 stocks I’d hold for the next 20 years

Looking for growth superstars to buy and hold for decades? These two shares could prove just the ticket.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

For investors seeking strong and sustained earnings growth for many years, it’s difficult to look past London’s quoted healthcare providers.

Those that specialise in keeping us alive and maintaining our wellbeing are a classic defensive play, with medicines and care demand remaining broadly resilient regardless of broader economic considerations. And thanks to population growth, the revenue opportunities of many of these businesses are improving year after year.

One such stock I’m tipping for greatness in the years ahead is Alliance Pharma (LSE: APH). Unlike most pharmaceutical plays — like GlaxoSmithKline and AstraZeneca, whose earnings visibility are not as strong thanks to the temperamental nature of drugs R&D — this business doesn’t have to worry about the impact of such setbacks as the drugs it acquires have already passed the often-painful development process.

What’s more, the treatment areas that Alliance Pharma concentrates on are relatively niche and with very little competition, provide profits estimates with that little extra visibility.

A long term lovely

Now new investors seeking exceptional earnings growth from the off are likely to be disappointed, with City analysts tipping a 12% fall in 2017.

That said, I would still consider now a terrific time to load up on the AIM-quoted business. Firstly, Alliance Pharma is expected to bounce back straight away from the aforementioned projected rare earnings dip with a 10% advance next year. And right now the medicines mammoth also deals on a pretty undemanding valuation, with the firm rocking a forward P/E ratio of 16.8 times.

This reading is also pretty reasonable when you consider the exceptional earnings possibilities created by Alliance Pharma’s commitment to acquisitions. It spent £16m on M&A action in 2017 alone to bolster its global footprint and, thanks to its strong balance sheet, free cash flow jumped to £21.7m last year, from £13m in the prior period. So investors can look forward to further earnings-driving buys in the years ahead.

Fuelled up

Applegreen (LSE: APGN) is another stock I’m tipping to thrive as it also splashes the cash to generate electric profits growth.

The AIM-listed stock, a major retailer at petrol stations in the Republic of Ireland, has spent a fortune on expansion in recent times and, as a result, the number of locations it operates from has leapt from 64 in 2009 to 342 just eight years later. And Applegreen’s growth strategy is also seeing it spread out onto foreign shores to boost its revenues possibilities still further.

Unlike Alliance Pharma, the Dublin company is not expected to endure any near-term earnings turbulence and it’s predicted by City analysts to generate a 5% bottom line improvement in 2018. And growth is expected to accelerate to 2019 next year as its expanded geographic presence delivers the goods.

Right now, Applegreen carries a forward P/E ratio of 23.3 times. This may be high but it should prove no barrier to further share price advances as the company’s market value has also swelled by more than a third over the past 12 months alone.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended Alliance Pharma and AstraZeneca. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

5 steps to start buying shares with under £500

Learn how this writer would start buying shares with a few hundred pounds in a handful of steps, if he…

Read more »

Young happy white woman loading groceries into the back of her car
Investing Articles

The FTSE 100 offers some great bargains. Is this one?

Our writer digs into one FTSE 100 share that has had a rough 2024 to date, ahead of its interim…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

£9,000 of savings? Here’s my 3-step approach to aim for £1,794 in passive income

Christopher Ruane walks through the practical steps he would take to try and turn £9,000 into a sizeable passive income…

Read more »

Group of young friends toasting each other with beers in a pub
Investing Articles

I’d buy 29,412 shares of this UK dividend stock for £150 a month in passive income

Insiders have been buying this dividend stock, which offers an 8.5% yield. Roland Head explains why he’d choose the shares…

Read more »

Red briefcase with the words Budget HM Treasury embossed in gold
Investing Articles

Could the new UK budget spell growth for these 6 FTSE stocks? I think so!

Mark David Hartley considers six UK stocks that could enjoy growth off the back of new measures announced in the…

Read more »

Investing Articles

With a 6.6% yield, is now the right time to add this income stock to my ISA?

Our writer’s looking to boost his Stocks and Shares ISA. With this in mind, he’s debating whether to buy a…

Read more »

Dividend Shares

This blue-chip FTSE stock just fell 12.5% in a day. Is it time to consider buying?

Smith & Nephew is a well-known, blue-chip FTSE stock with a decent dividend yield. And its share price just dropped…

Read more »

Investing Articles

At 72p, the Vodafone share price looks to be at least 33% undervalued to me

Our writer looks at a number of valuation measures to determine whether the Vodafone share price reflects the fair value…

Read more »