While the thought of being an AARP cardmember may be far away, it’s never too early to start thinking about cheap retirement stocks to buy. True, timing the market carries risks. However, with so many underappreciated bargains on the table with relevant long-term businesses, forward-thinking investors should consider high-potential opportunities.
To be fair, with myriad publications printing stories about cheap retirement stocks to buy, it’s difficult to understand which ideas are great deals and which ones are actually duds to avoid. To help bring arguably the best names to the table, I extracted equities based on their fiscal stability metrics and value relative to earnings (against their industry norms.)
So, if you want to skip the line on that senior discount, these are the cheap retirement stocks to buy now.
Cheap Retirement Stocks: Pfizer (PFE)
A pharmaceutical giant, Pfizer (NYSE:PFE) generated both intense interest and controversy for helping to spearhead one of the few coronavirus vaccines available. Initially, PFE shot higher in the market based on its obvious relevance. However, as fears of Covid-19 faded, that relevance also slipped into the rearview mirror. Nevertheless, the acumen developed from forwarding a novel messenger-RNA-based vaccine may help undergird future innovations.
For the most part, Wall Street didn’t really give much credence to the upside narrative, but it soon might eat its words. On a year-to-date (YTD) basis, PFE slipped about 5% of equity value. However, in the trailing month, the bulls bid up shares, which gained over 10%. As well, in the trailing five days, PFE is up almost 4%. Therefore, Pfizer may represent one of the cheap retirement stocks to buy now.
Adding to the intrigue is that PFE rates as “significantly undervalued” based on traditional metrics. Currently, it trades at 10.3 times trailing-12-month (TTM) earnings, compared to the industry median of 21.8 times. Also, its forward price-to-earnings (P/E) ratio is 10.8 times, noticeably below the industry median of 15.8 times.
BHP Group (BHP)
While I’ve mentioned mining specialist BHP Group (NYSE:BHP) for quite some time now, it’s for a reason: BHP makes for a great name among cheap retirement stocks to buy. Fundamentally, the company essentially mines and extracts the commodities of tomorrow. Notably, it produces copper, which plays an integral role in the production of electric vehicles. So, if you believe in EVs, you should believe in BHP.
In terms of market performance, Wall Street has definitely started to come around to the idea. Since the January opener, BHP gained nearly 15% of equity value. Further, in the trailing month, shares popped higher to the tune of almost 4%. It’s not surprising because unlike other mining firms, BHP features a stable balance sheet. For example, its Altman Z-Score pings at 5.61, reflecting low bankruptcy risk.
Of course, the theme here centers on cheap retirement stocks and that’s what BHP is — cheap. Currently, the market prices shares at 5.1 times TTM earnings. In contrast, the industry median is nearly 12 times.
Cheap Retirement Stocks: Tyson Foods (TSN)
While Tyson Foods (NYSE:TSN) generated some interesting headlines in recent months, TSN should still be on your radar for cheap retirement stocks to buy. Fundamentally and cynically, humans require a minimum amount of calories to survive. Therefore, households will sacrifice just about everything else to keep food on the table.
To be fair, analysts have a consensus “hold” rating on TSN, so it’s not exactly a Wall Street favorite. Plus, the company incurred pricing pressures due to inflationary headwinds. Nevertheless, TSN also features redeeming qualities.
For instance, Tyson carries a forward yield of 2.97%, beating out the sector average of 1.89%. True, it’s not the most generous dividend. Nevertheless, keep in mind the payout ratio sits at 29.73%, meaning that it’s a stable outflow of passive income.
Addressing the theme of cheap retirement stocks to buy directly, Tyson shares are priced at 7.1 times trailing earnings and 9.4 times forward earnings. Both metrics rank well below their respective industry median levels. Combined with a solid balance sheet and profit margins, TSN makes for an attractive investment.
An American producer of steel and related products, Nucor (NYSE:NUE) incurred a choppy ride throughout this year. However, the net picture overall has been resoundingly positive. Since the start of this year, NUE gained 20% of equity value. For context, the benchmark S&P 500 index is still down nearly 19% during the same period.
Despite its outperformance, NUE still ranks among the cheap retirement stocks to buy for those thinking long term. For instance, President Joe Biden’s administration’s initiatives to boost American infrastructure across the board should generally benefit NUE.
Still, for full disclosure, analysts apparently believe most of the good news has been baked in. At time of writing, NUE features a consensus view of “hold.”
As well, according to Gurufocus, NUE rates as “fairly valued.” However, Nucor’s P/E ratio sits at 4.3 times. In contrast, the industry median pings at 7.7 times. Also, the company’s price-earnings-growth (PEG) ratio is 0.2 times, ranking below 77.5% of the competition. Adding in Nucor’s strengths in the balance sheet, NUE makes an interesting case for cheap retirement stocks to buy.
Cheap Retirement Stocks: Vishay Intertechnology (VSH)
A manufacturer of discrete semiconductors and passive electronic components, Vishay Intertechnology (NYSE:VSH) earlier suffered from headwinds that snarled other technology players such as the global supply chain disruption. However, circumstances turned positive recently for VSH. Since the January opener, VSH is down only 2.3%.
Fundamentally, Vishay – while perhaps not the most well-known enterprise – offers myriad relevancies. Per its public profile, the company produces selected integrated circuits, resistors, capacitors and inductors, among other components. Essentially, Vishay quietly undergirds the burgeoning innovation space, making it a smart idea among cheap retirement stocks.
And it certainly is cheap against the norms of the underlying industry. Currently, the market prices VSH at 8 times TTM earnings, below the industry median of 17.5 times. Also, Vishay’s forward P/E ratio is 7.2 times, well below the industry median of 18.2 times. Combined with solid metrics across other financial segments, VSH deserves consideration as one of the cheap retirement stocks to buy.
An American shipping and navigation services company headquartered in Honolulu, Hawaii, Matson (NYSE:MATX) understandably took some heat this year. Mainly, global recession fears pose great challenges in the broader business ecosystem. As well, consumer sentiment sits near all-time recorded lows, which isn’t great for shipping services. Since the beginning of the year, MATX has slipped by more than 31% of market value.
At the same time, near-term momentum builds in Matson shares. In the last five days, MATX gained nearly 3%. Further, hedge funds have slowly started to build their position in MATX since the first quarter of 2022. Over time, as the global economy normalizes, it’s possible that Matson could provide upside for contrarian investors. Also, while its forward yield of 2% isn’t anything to write home about, its payout ratio is very sustainable at 17.3%.
Of course, with the theme being cheap retirement stocks to buy, we must talk about the wicked deal that you get with Matson. At the moment, the market prices MATX at 1.8 times TTM earnings, dramatically below the industry median of 12.6 times. Just as importantly, Matson commands a stable balance sheet and outstanding growth and profitability metrics.
Cheap Retirement Stocks: Williams-Sonoma (WSM)
As a consumer retail firm that sells kitchenware and home furnishings, Williams-Sonoma (NYSE:WSM) presents great risks. Just like I mentioned earlier, the consumer sentiment index slipped to near historic lows. Further, plenty of evidence indicates many consumers (though not all) tightened their wallets. With the inflation rate exceeding modern norms, few people are interested in unnecessary risks.
However, what might intrigue investors of cheap retirement stocks is that Williams-Sonoma doesn’t represent an ordinary retailer. Clearly, the company caters to the wealthy. Research into the topic indicates that the average shopper there carries a household income of $100,000, significantly higher than the U.S. median household income. With the company unlikely to pivot its business model, retirees may enjoy economic resilience because the customers are themselves resilient.
Also, in keeping with the theme of cheap retirement stocks to buy, that’s exactly what WSM is. Currently, the market prices WSM at 7 times forward earnings, compared to the industry median of 15.3 times. Bring in the excellent growth and profit margins (plus a stable balance sheet with an Altman Z-Score of 4.8) and you have objective numbers that are difficult to ignore.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.