Since Warren Buffett’s favoured holding period is apparently forever, holding a share for a decade may not be all that long. In fact, a company’s strategy, competitive advantage and growth potential would be likely to come to fruition only in the long run. With that in mind, here are two shares which could be worth buying now and not selling for at least 10 years.
Gold price potential
The price of gold could move significantly higher over the next decade. The main reason for this is the potential for higher inflation. In the last decade, the world has faced a deflationary threat to which it has responded with lower interest rates and quantitative easing. However, now that President Trump is expected to relax fiscal policy in the US in the form of tax cuts and higher spending, the potential for rising inflation is very real.
In response, assets which have traditionally held their value relatively well could prove popular. Gold is perhaps the most obvious of assets to do so, which is why buying a gold miner such as Randgold Resources (LSE: RRS) could prove to be a sound move.
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Alongside a rising gold price, Randgold Resources also has growth potential thanks to its current strategy. This has been focused on reducing costs, improving its financial standing and increasing production. Together, these changes are expected to result in a rise in earnings of 24% this year and 23% next year.
However, since the company’s shares trade on a price-to-earnings growth (PEG) ratio of just one, their prospects do not appear to be priced-in to their current valuation. As such, now could be the right time to buy a slice of Randgold Resources, with its popularity as a store of wealth likely to rise over the coming years.
Diversified growth opportunity
Whitbread (LSE: WTB) could also offer stunning capital gains in the long run. Its business model is relatively well-diversified, with its Premier Inn hotel chain and Costa coffee chain offering strong growth potential despite weak consumer confidence in the UK.
Both strands of the business appear to have relatively high levels of customer loyalty which are unlikely to be reduced during periods of economic difficulty.
In fact, during the credit crunch the popularity of Premier Inn increased as consumers sought lower-priced hotel rooms. With consumer confidence already weak and inflation on the rise, a similar situation could occur over the medium term. Costa could also offer defensive characteristics, while any potential weakness in Whitbread’s restaurants division appears to be factored-into its current valuation.
Whitbread trades on a price-to-earnings (P/E) ratio of just 15.2, which equates to a PEG ratio of only 1.6 when its growth prospects for 2017 and 2018 are taken into acocunt. Beyond 2018, expansion abroad as well as a rise in the number of hotel rooms and Costa stores could allow the company to deliver share price performance which easily beats that of the FTSE 100.
