Image source: The Motley Fool
As a long-term investor, my ideal time to hold stocks is years and years. After all, if I'm buying a company that I think has great potential at an attractive price, why wouldn't I rush to sell? I already own some British shares that I can hold for life – 'basically'.
I emphasize that because even for the long-term investor, the time may come to sell all or part of the holding. Maybe because cash is needed. Perhaps a rise in share price means that one share now takes up too much of the portfolio, reducing diversification. Perhaps the commercial environment has changed. Or maybe the business still looks strong but the rising share price since the buyout means it makes sense to take some profit off the table.
Billionaire investor Warren Buffett recently sold a large portion (though far from all) of his largest holdings, an apple. I don't know why, although he doesn't seem to need the money. But the sale shows that anyone who says his favorite time”forever” may not be stocked for that long.
With that caveat, here are two British stocks that I would happily hold for life, if the circumstances were right for me to do so.
Diageo
The first is actually a company that Buffett owns many years ago when it sold under the name of its famous stout Guinness. Now known as Diageo (LSE: DGE), the business has the potential to make major brands emerge Johnny Walker to The Baileys and dark things.
Recently, things have not gone as we had hoped. Sales patterns in Latin America are showing signs of weak demand and there is a risk that this may be the case in many other markets in the coming months. In addition, many young consumers are teetotal. Diageo shares are down 28% in five years.
That puts them in what I see as a reasonable balance and I've been buying recently. As another Buffett holds, Coca-ColaDiageo is a Dividend Aristocrat and has raised its dividend every year for over three decades. It owns iconic brands that give it strong pricing power.
Sales have fluctuated, but I expect them to remain large and likely to grow over time.
Science Judges
A market capitalization of £55bn makes Diageo well known FTSE 100one small business company that still flies under the radar of many investors Science Judges (LSE: JDG), which has a market cap of just under £700m.
The maker of scientific instruments has many of the qualities Buffett looks for when choosing stocks to buy. It works in an environment where quality is of the utmost importance, giving you price power. The need for precision measurement tools is likely to endure over time.
By buying small makers at attractive prices, the Judges have built a profitable business with rapidly growing profits. Another risk is that its success encourages copycats, raising the price of future acquisitions.
But if I owned this share of Britain, would I hold it for the rest of my life? Yes – if the price didn't come too far ahead of what I saw as intrinsic value.
The current price-to-earnings ratio of 71 looks high to me. At a very low rate, I would be happy to buy this share and hold it for decades.
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