2 Growth Stocks for Your 2013 Roth IRA Contribution

Consider investing your Roth IRA dollars in Snap-on and Stericycle.

Mar 19, 2014 at 4:36PM

With less than one month to go before the tax-filing deadline, it's time to fund your Roth IRA. Here are two attractive stocks worth considering for your Roth contribution dollars. Both boast exciting growth prospects and competitive positions in their respective industries.

Snap-on (NYSE:SNA)Primarily known for its Snap-on tools and focus on automotive repair, the Wisconsin-based company has broadened its focus to reach other industries, including aviation, agriculture, and mining. This has allowed Snap-on to diversify its revenue stream and fuel growth, which should drive earnings in the future. Beyond tools, Snap-on also sells diagnostic equipment and software, which are extremely profitable compared with Snap-on's other business segments. With an attractive margin profile and the potential for growth, this segment should help drive stronger sales and earnings growth. Snap-on is also expanding into emerging markets, specifically China and India. Only 10% of Snap-on's 2013 sales were derived from Asia, signifying a lot of growth potential.

Over the past three years, Snap-on's revenue has averaged annual growth of 5%, while earnings have averaged 22% growth. The company's recent P/E ratio has been just under 19, while the industry average P/E is close to 23. Snap-on's forward-looking P/E, based on next year's earnings, is less than 15. Snap-on's future growth prospects and enticing current valuation makes it a great candidate for your 2013 Roth IRA contribution dollars.

Stericycle (NASDAQ:SRCL)Stericycle collects and treats regulated medical waste such as syringes and gloves. The company also provides training on medical-waste handling, manages patient communications, and offers a service to manage customer returns and recalls of pharmaceuticals or medical devices. The Illinois-based company has established itself as the market leader in medical-waste collection and disposal through its extensive collection network. The disposal of medical waste is heavily regulated. As such, hospitals and medical clinics continually outsource the handling of medical waste to experts. New regulations provide additional avenues of growth for Stericycle. The rising and aging U.S. population should also drive an increase in medical procedures and prescribed medications, which will increase the quantity of medical waste. Stericycle is well-positioned to benefit from this trend.

Over the past three years, Stericycle's revenue has averaged annual growth of 14% and earnings have also averaged 14%. The company's recent P/E ratio has been around 32, while the industry average P/E is about 46. Meanwhile, Stericycle's forward-looking P/E is 24. Be sure to consider Stericycle for your 2013 Roth IRA contribution.

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Consider these two attractive growth stocks for your Roth IRA today. You have until the April 15 tax-filing deadline to make your contribution for 2013. Before doing so, be sure to familiarize yourself with Roth IRA rules and eligibility requirements.

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Nicole Seghetti has no position in any stocks mentioned. Follow her on Twitter @NicoleSeghetti. The Motley Fool recommends Stericycle. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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