Investing in Long Term Leader Equities

Whilst investing into equities should generally be considered with a long term timeframe, this doesn’t necessarily mean that you should simply buy and hold individual stocks literally for the long term. Instead, the objective should be to focus on acquiring stocks that can potentially be held for the long term based on their performance characteristics. This type of stock may best be described as Long Term Leader stocks.

There are key criteria that should be adhered to when identifying and acquiring Long Term Leader stocks.

Stocks with Long Term Stable Earnings Growth

The focus should be on stocks offering stable earnings growth, stable price performance and high-quality institutional ownership. Strong earnings growth can be a major catalyst for big moves in stock prices. Stability of earnings should be favoured over big triple-digit numbers. The stock might be later in its lifecycle, but despite its size it delivers consistently superior results.

Superior Long Term Relative Strength

Long Term Leader stocks consistently outperform key indices such as the S&P 500, so these stocks have strong Relative Strength lines. It is quite common for a stock’s strong price performance to be explained by the fact that the best fund managers have gravitated to that stock. It therefore makes good sense to screen the individual stock holdings of the best fund managers when searching for Long Term Leaders.

When to Sell Stocks – Or Hold

Monitoring an individual stock’s long term trend is critical to get a long term perspective. Analysing a stock’s performance using the 40 Week Moving Average line is more important than analysing the stock’s 10 Week Moving Average line to identify Long Term Leader stocks. This will lead to less turnover and lower volatility in the portfolio over stocks held compared with holding many of the fastest growing stocks while still providing outperformance versus the market.

Long Term Leader Stock Examples

Whilst the list below is not exhaustive, here is a sample of US stocks that should currently be considered as suitable Long-Term Leaders: