The best retirement stocks are easy enough to find if you take the time to look.
While it still is a challenging time to invest if you have a short time horizon, for investors with longer time horizons, current conditions remain favorable when it comes to entering/adding to positions in long-term opportunities.
Macro uncertainties continue to hold them at depressed prices, but over time, the best retirement stocks can generate strong returns through share price appreciation. In the case of many names in this category, steady, growing dividends also provide a further boost to long-term total returns. It’s easy to conflate “retirement stock” with “blue-chip stock.”
Besides “blue chips,” many names better described as “growth stocks” also fit into this category. For instance, capitalizing on long-term trends, such as e-commerce or the rise of electric vehicles.
If you’re looking to grow your nest egg, consider adding these seven stocks to your portfolio. Each earning either an A or B in Portfolio Grader, these are some of the best retirement stocks out there.
Arhaus (ARHS)
Going public just over a year ago, just before the start of the market downturn, Arhaus (NASDAQ:ARHS) shares have dropped from their IPO price of $13 per share. Not too shocking, given the current discouraging trends in housing. Still this opportunity makes in one of the best retirement stocks to buy.
So, should you steer clear of this home furnishings retailer, which grew rapidly during the pandemic, going forward? Not so fast! You may want to make ARHS stock a buy instead. As Luke Lango argued last month, this company is well-equipped to stay resilient during today’s economic challenges, thanks largely to its brand cachet.
Once the current economic slowdown passes, Arhaus will likely return to high-growth mode. Put simply, ARHS (earning a B in Portfolio Grader) has the makings of a long-term winner. Trading for only 12.2 times earnings this high-quality retirement stock is reasonably priced to boot. Now may be the time to begin accumulating a position.
Chevron (CVX)
After an incredibly strong run during 2022, thanks to the big jump in oil prices, it’s understandable if you are concerned that major energy stocks like Chevron (NYSE:CVX) are going to produce subpar returns going forward.
Along with this, there may be concerns that the push for renewable energy will drive fossil fuel purveyors out of business. However, look at the details, and it is clear that this perception for CVX stock and its peers is largely unfounded. Factors such as tight supplies and geopolitical tensions point to crude oil staying at, or perhaps moving above, current prices.
As for Chevron’s future in a “greener” world? Like its “big oil” rivals, the company is investing billions into acquisitions/projects in areas like biofuels and carbon capture. All things considered, CVX, which earns an “A” in Portfolio Grader, remains a worthy choice for a retirement portfolio.
Fortinet (FTNT)
Again, many of the best retirement stocks to buy are growth plays with high exposure to long-term trends. Fortinet (NASDAQ:FTNT) is a name that more than meets these criteria. Demand for cybersecurity services keeps growing, even as the economic downturn is having an impact on enterprise IT spending.
This points to continued growth for this provider of cybersecurity software solutions in the near term, albeit at a slower pace compared to the preceding years. This will likely enable FTNT stock (which earns a B in Portfolio Grader) to sustain its present forward valuation (around 45.2 times estimated 2022 earnings).
Looking beyond just the coming year, the ever-increasing need for adequate cybersecurity production will continue to drive demand, resulting in continued revenue/earnings growth. Analyst forecasts FTNT’s 2024 earnings per share (or EPS) to be more than double compared to 2021 EPS ($1.72 versus 73 cents).
Murphy USA (MUSA)
Murphy USA (NYSE:MUSA) operates 1,679 retail gas station/convenience stores across the United States, primarily in locations in close proximity to a Wal-Mart (NYSE:WMT). Soaring gasoline prices have resulted in a big increase in Murphy’s profitability in the past year.
This has made MUSA stock a strong performance year-to-date, up by 46.2%. Future gains may not come in as rapidly as future gains, but that doesn’t mean this A-rated energy stock will disappoint from here. Mainly, through management’s aggressive return-of-capital efforts.
Murphy USA is currently in the process of buying back $1 billion worth of shares. The company also recently upped its dividend to 35 cents per quarter ($1.40 per share annually).
Management is also putting earnings to work to organically grow the business. In short, MUSA is well-positioned to deliver strong returns, as shares appreciate in line with continued EPS growth.
Pinduoduo (PDD)
Pinduoduo (NASDAQ:PDD) is a major player in the Chinese e-commerce industry.
It may lack the global name recognition of Alibaba (NYSE:BABA), yet in its home market, this online retailer has carved out a niche by specializing in group buyer purchases.
In other words, groups of consumers band together to buy in bulk from the platform, creating a win-win for all parties (low prices for buyers, high volume for Pinduoduo). Speaking of volume growth, the company’s revenue has grown considerably in recent years, enabling it to become consistently profitable.
PDD stock has been under pressure due to the economic and political headwinds currently playing out in China. Still, as PDD trades for 22.2 times earnings these risks may already be priced-in, and then some. Also eying an expansion into the U.S. market, the B-rated stock is likely to keep thriving in the long term.
Sociedad Quimica y Minera de Chile (SQM)
Sociedad Quimica y Minera de Chile (NYSE:SQM) provides the world with a variety of basic materials, yet lately, it’s been one basic material in particular (lithium) that has had the market excited about this stock.
Thanks to the EV boom, demand for lithium (essential in the production of EV batteries) has gone through the roof. As a result, spot lithium prices have spiked, resulting in a massive spike for this company’s profitability, as well as the SQM stock price.
However, despite concerns about a “lithium bust,” there’s a lot to suggest that the current lithium boom will carry on for years to come.
SQM (rated in A in Portfolio Grader) remains a perfect fit for not just growth investors, but value and dividend investors as well. Besides offering growth potential, SQM trades at a low valuation (13.7 times earnings), and has a forward dividend yield of 6.6%.
Exxon Mobil (XOM)
Exxon Mobil (NYSE:XOM) is another integrated energy play that’s still worthy of inclusion as a long-term position in a retirement portfolio.
Besides the strong chance of oil prices holding steady near current levels, much like with CVX stock, the push for “net zero” carbon emissions is more of a catalyst than a risk for this stock.
Although the global pivot towards renewables may mean oil use peaks by the mid-2030s, the company’s pursuit of “green” opportunities with high return-on-investment potential could far outweigh this factor.
Furthermore, along with forward-thinking investments in carbon capture and hydrogen projects, Exxon Mobil is practicing disciplined capital allocation, by reducing operating costs.
In turn, management is returning these savings to XOM stock investors, in the form of dividends and share repurchases. Add it all up, and it’s clear XOM (rated A in Portfolio Grader) continues to be a great core holding for retirement portfolios.
— Louis Navellier and the Investor Place Research Staff
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