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“I buy on the assumption that they could close the market the next day and not reopen it for five years.”

— Warren Buffett

The above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a five year period?

Today, let’s look backwards in time to 2014, and take a look at what happened to investors who asked that very question about AutoZone, Inc. (NYSE: AZO), by taking a look at the investment outcome over a five year holding period.

Start date: 04/21/2014
$10,000

04/21/2014
$20,239

04/17/2019
End date: 04/17/2019
Start price/share: $519.40
End price/share: $1,051.37
Starting shares: 19.25
Ending shares: 19.25
Dividends reinvested/share: $0.00
Total return: 102.42%
Average annual return: 15.17%
Starting investment: $10,000.00
Ending investment: $20,239.17

As shown above, the five year investment result worked out exceptionally well, with an annualized rate of return of 15.17%. This would have turned a $10K investment made 5 years ago into $20,239.17 today (as of 04/17/2019). On a total return basis, that’s a result of 102.42% (something to think about: how might AZO shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

One more piece of investment wisdom to leave you with:
“Buy not on optimism, but on arithmetic.” — Benjamin Graham