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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 2016, and take a look at what happened to investors who asked that very question about Hologic Inc (NASD: HOLX), by taking a look at the investment outcome over a five year holding period.

Start date: 01/28/2016
$10,000

01/28/2016
$21,924

01/27/2021
End date: 01/27/2021
Start price/share: $33.07
End price/share: $72.51
Starting shares: 302.39
Ending shares: 302.39
Dividends reinvested/share: $0.00
Total return: 119.26%
Average annual return: 16.99%
Starting investment: $10,000.00
Ending investment: $21,924.54

As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 16.99%. This would have turned a $10K investment made 5 years ago into $21,924.54 today (as of 01/27/2021). On a total return basis, that’s a result of 119.26% (something to think about: how might HOLX shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

More investment wisdom to ponder:
“Ensure management’s interests are aligned with shareholders.” — Sam Zell