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According to research by Fidelity, as of 31 December, the Australian share market has generated an average total return of 8.55% per annum over the last 30 years.
This means that if you had made a single investment of $25,000 into the share market in 1991 and earned the market return, it would have grown to just under $300,000 today. This demonstrates why buy and hold investing can be such a rewarding endeavour and why Warren Buffett is such a big advocate of the strategy.
With that in mind, here are a couple of ASX shares that have been tipped as top long term options for investors:
Hipages Group Holdings Ltd (ASX: HPG)
The first buy and hold option to consider is Hipages. It is a growing Australian-based online platform and software as a service (SaaS) provider with a focus on connecting tradies with residential and commercial customers. From its platform, it provides job leads from homeowners and organisations looking for qualified professionals.
At present, the company is capturing around 5% of total industry advertising spend. However, analysts at Goldman Sachs see scope for this to increase to levels enjoyed by property listings company REA Group Limited (ASX: REA) in the future as it builds out its ecosystem.
Goldman explained: “We see HPG as an attractive medium-term growth stock – HPG currently captures c.5% of the total industry advertising spend; by contrast REA/CAR capture c.40-60% of spending in their respective categories. As HPG builds out its ecosystem (including the imminent launch of the new “TradieCore” field service software solution), we see scope for HPG to increase its share towards these levels over the long term as the marketplace leader.”
The broker currently has a buy rating and $3.40 price target in Hipages’ shares.
Nanosonics Ltd (ASX: NAN)
Another buy and hold option to consider is Nanosonics. It is a medical device company with a focus on infection prevention. This is something which is growing in importance right now because of the pandemic.
At present, the company generates all its revenue from its industry-leading trophon EPR disinfection system for ultrasound probes. This comes from both unit sales and the consumable products the system requires.
The latter has been growing strongly over the last few years thanks to its expanding footprint. In fact, management estimates that there are now 80,000 patients protected from the risk of cross contamination every day because the ultrasound probe has been high-level disinfected with trophon.
Pleasingly, it may not be long until Nanosonics has another product to boost its revenues. Management is working on several new products that are targeting unmet needs with similarly sized addressable markets.
UBS is very positive on the company. The broker has a buy rating and $7.00 price target on its shares. It believes Nanosonics is a high-quality structural growth story in a post-COVID world.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Hipages Group Holdings Ltd. and Nanosonics Limited. The Motley Fool Australia owns shares of and has recommended Nanosonics Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.