When it comes to retirement investing, many investors feel comfortable staying away from growth stocks and sticking with income investments, dividend stocks and securities they perceive as being less risky.
Growth stocks can be troublesome if one focuses on the momentum stocks that have been behind the explosion in the indices.
However, growth stocks are a fundamental part of any retirement investing portfolio, including retirement. Here are three stocks to buy for your retirement portfolio.
Apple Inc. (NASDAQ:AAPL) is not what I would call a momentum stock. In fact, with the recent tax cut bill, AAPL stock may just become a “GARP” stock — Growth at a Reasonable Price.
AAPL stock has $268 billion of cash and investments on its balance sheet, almost all of which is held overseas. If the tax bill passes, Apple can repatriate about $216 billion of that cash and put it to work. Backing out the $94 billion in long-term debt it carries, AAPL stock has $35-per-share in net cash.
With a market cap of $871 billion the market thus values the business at $777 billion. With $48 billion in TTM net income, AAPL stock still only trades at about 16.5x net income. Analysts see 11% annualized growth going forward.
But when I add a 1-% premium for having amazing cash flow, great cash position and a world class brand name, I am very happy to get AAPL stock at this price for the long-term when it comes to retirement investing.
Icahn Enterprises LP (NASDAQ:IEP) is not known as a growth or a dividend stock. Yet it is a stock that is really about value and dividends and it’s good for retirement investing.
IEP is the publicly traded security in which you can invest alongside Carl Icahn. Icahn is known for buying distressed assets, installing himself and other friendly board members, and then turning the companies around for a large profit.
He also invests in stocks that he thinks have long-term secular tailwinds, like auto parts stores.
IEP stock is near multiyear lows, near $50-per-share, and well below its all-time high. It’s a perfect time to enter, and IEP stock also pays a $6-per-share annual dividend. That’s almost 12%.
IEP stock requires patience. It will not go up in a straight line, but Icahn is literally the most successful investor in history, even more so than Warren Buffett, Barry Diller or John Malone.
I hope retirement investors don’t get annoyed with me for suggesting Senior Housing Properties Trust (NASDAQ:SNH) for retirement investing. The population is aging, and all those millions of baby-boomers are moving into senior housing facilities.
This is a secular trend. However, one must be careful not only with the facility one may choose for oneself or loved ones, but also what stock to select.
Not every senior housing company does a very good job. However, SNH does, and it is diversified. It also stretches into other types of facilities that offer care services for seniors. 43% of its properties are not actual senior housing, but skilled nurse facilities and spaces for medical offices.
In addition, clinics and biotech firms lease space from SNH as a land-owner.
With over 425 properties in some 42 states, and more than $8 billion of assets under management, and only 6% of properties with a capital lease or mortgage, it is exceptionally well positioned. It also pays a dividend exceeding 8%, with growth prospects as well.
Lawrence Meyers is the CEO of PDL Capital, a specialty lender focusing on consumer finance and is the Manager of The Liberty Portfolio at www.thelibertyportfolio.com. He does not own any of the aforementioned stocks. He has 22 years’ experience in the stock market, and has written more than 1,600 articles on investing. Lawrence Meyers can be reached at TheLibertyPortfolio@gmail.com.