2 growth stocks I'd buy and hold for 25 years
Finding shares which offer sustainable growth prospects can be challenging. Customer tastes change and technological advances can mean some products and services are made redundant over time. However, some sectors can offer sustainable growth due to the likelihood of constant and even growing demand from consumers. For example, healthcare is likely to enjoy a tailwind from a growing and ageing world population.
With this in mind, here are two stocks which have exposure to the healthcare industry that could be worth buying and holding for a long period of time.
Reporting on Thursday was global specialist healthcare company BTG(LSE: BTG). Its performance in the first half of the year was in line with expectations, and it remains on track to hit its guidance for the full year. Its Specialty Pharmaceuticals and Interventional Medicine divisions have performed as expected, while Licensing revenue could be slightly stronger than anticipated for the full year.
The company has also announced the acquisition of Roxwood Medical. It is an innovative provider of advanced cardiovascular speciality catheters used in the treatment of patients with severe coronary and peripheral artery disease. This could provide BTG with improved growth potential as well as help to diversity its current business model.
Looking ahead, the stock is expected to report a rise in its bottom line of 29% in the current year, followed by further growth of 15% next year. Despite such strong growth prospects, it trades on a price-to-earnings growth (PEG) ratio of just 1.3 and this suggests that it could post improved share price performance in future. With the company having a solid balance sheet and improving outlook, it could be a top performer within what already appears to be a highly lucrative sector for the long run.
Also offering capital growth potential in the long run is Halma(LSE: HLMA). It focuses on manufacturing a range of products which seek to protect and improve the quality of life for people. The company has been able to deliver growing profitability in each of the last five years, with its bottom line rising at an annualised rate of 10% during the period.
The outlook for the business is also encouraging. It is due to report a rise in its bottom line of 7%-8% per year over the next two financial years. Given its strong track record of growth, the chances of it meeting its forecasts appear to be relatively high. Certainly, a price-to-earnings (P/E) ratio of 26.4 is not exactly cheap, but given its long-term growth potential and reliable performance, it seems to be a fair price to pay.
With dividends covered three times by profit, there is scope for a significant rise in shareholder payouts in the long run. While the stock currently yields just 1.3%, it could gradually become a sought-after income investment in the long run. As such, now seems to be the perfect time to buy it.
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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has recommended BTG and Halma. 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.