Fund managers, by necessity, can’t employ a ‘buy and hold’ strategy. But here are 4 more stocks they would grab if they could.
The post 4 ASX shares to hold for 5 years appeared first on The Motley Fool Australia. –
Last month, The Motley Fool readers loved seeing which ASX shares professional investors wanted to keep in their portfolios for 5 years.
This is because even though retail investors are told to look to the long term, fund managers behave in the opposite way.
Their performances are judged on a weekly, monthly, quarterly and yearly basis, which is not necessarily conducive for holding onto a stock for several years.
This is why during each interview for our Ask A Fund Manager series, The Motley Fool refreshingly asks ‘If the market closed tomorrow for 5 years, which stock would you want to hold?’
Here are 4 more ASX shares that the pros would be happy to hold onto until 2026:
ASX tech share that founder still holds after 30+ years
NAOS Asset Management portfolio manager Robert Miller picked Objective Corporation Limited (ASX: OCL), which has been listed on the ASX for more than 20 years.
The share price has multiplied 21 times over that time.
Objective Corp makes enterprise software for governance and workflow, which is primarily used by public sector organisations.
“The business was founded by Tony Walls, who founded it over 30 years ago now. He’s still the CEO and the major shareholder. He still owns over 65% of the shares on issue,” Miller told The Motley Fool.
“They haven’t raised capital since back in 2000.”
Miller likes how Objective Corp keeps putting money back into the business to grow it.
“They are continually reinvesting in the product and the software offering to make it a benefit for their customers, which in turn drives growth, which they in turn reinvest back in the businesses, and it becomes a bit of a perpetual cycle like that,” he said.
“Very much if the market closed tomorrow … happy to hold this for that period of time.”
Internet connection is a utility now
The last 18 months of one and off COVID-19 lockdowns has really brought home the fact that internet connectivity is now as basic as water or electricity.
This is why 1851 Capital portfolio manager Martin Hickson reckons connectivity wholesaler Uniti Group Ltd (ASX: UWL) is one to hold for the next 5 years.
The network infrastructure company was the fund’s largest position back in June.
“Reason is 90% of their earnings are recurring — so there’s not a lot of risk around that,” he told The Motley Fool.
“They’re providing data to their customers. And so they’re participating in that thematic of increased data usage, demand for high speeds, and that’s not going away over the next 5 years.”
SG Hiscock portfolio manager Hamish Tadgell told The Motley Fool in January that Uniti had a comfortable position in the market.
“Our view is that Uniti is now the number 2 player in what is essentially a duopoly market with NBN.”
Uniti shares are up a stunning 188% over the past 12 months.
ASX share that’s not too hot, not too cold
Sage Capital portfolio manager Sean Fenton thought 5 years is an eternity for ASX shares and the economy.
“Inflation could go up, interest rates could be structurally higher, it might get lower or could be all great,” he told The Motley Fool.
“I don’t think you want to go for a stock that’s got too much growth, that would be pressured by rising yields. And you don’t want to go for something that’s too cheap… or too cyclical because the cycle could have turned within 5 years.”
So the stable choice for him was Metcash Limited (ASX: MTS).
“That’s one where we see some operational improvement come into the business.”
Like other supermarkets, the company has been a COVID beneficiary. But Fenton reckons eating-in will be a lasting trend as working from home or regional areas become more prevalent going forward.
“That benefits Metcash and their IGA network being more exposed to suburban regional areas, less CBD-style areas.”
Metcash is also set to benefit from a surge in building and renovations.
“They’ve also been moving more into hardware — so from Mitre 10 to buying Home Timber & Hardware from Woolworths Group Ltd (ASX: WOW) and Total Tools recently, that’s an area that’s really benefiting.”
Shares for Metcash have risen 17.4% this year.
‘Australia’s major defence stock’
Defence, in more ways than one, is the best 5-year bet for Monash Investors co-founder and director Simon Shields.
“Electro Optic Systems Holdings Ltd (ASX: EOS) [is] Australia’s probably major defence stock, and fantastic technology in laser targeting for use in space communications, tracking satellites, space junk, and by the military,” he told The Motley Fool.
“It’s just got a very long pipeline of contracts that it’s going to be bidding on and almost certainly likely to win a very large percentage of those, given its leadership in those areas.”
EOS shares are in a dip at the moment. They’ve sunk more than 36% for the year so far, despite rising 177% over the past 5 years.
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Motley Fool contributor Tony Yoo 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 Electro Optic Systems Holdings Limited and Objective Corporation Limited. The Motley Fool Australia owns shares of and has recommended Electro Optic Systems Holdings Limited. The Motley Fool Australia has recommended Uniti Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.