3 Growth Stocks Worth Considering for Your Roth IRA

Three stocks worthy of your Roth IRA dollars.

Mar 19, 2014 at 9:13AM

With less than one month left before the tax-filing deadline, it's time to fund a Roth IRA if you haven't done so already. Let's briefly discuss why a Roth IRA is so essential in saving for your retirement. Then we'll look at three great growth stocks for your Roth.

See you later, Uncle Sam
A Roth IRA is one of the best ways to save for retirement. You contribute after-tax dollars to a Roth in exchange for tax-free earnings. You have until the April 15 tax-filing deadline to make your contribution for 2013. Before contributing, familiarize yourself with Roth IRA rules and eligibility requirements.

Stocks for the growth investor
For investors seeking growth, I've narrowed the stock universe down to three great companies, all boasting exciting growth prospects and competitive positions in their respective industries.

Zoetis (NYSE:ZTS)
The world's largest animal health company, Zoetis serves the farm and companion animal markets, which both offer attractive growth potential. Rising populations, a growing global middle class, and higher-protein diets in emerging markets support demand for livestock health products. Companion animal health should benefit from increasing pet ownership and the willingness of pet owners to spend on Fido's medical care. In fact, pet expenditures in the U.S. reached a record $55.7 billion last year. Relative to the human pharmaceutical industry, animal health benefits from fewer regulatory restrictions and less generic competition.

Zoetis' revenue has averaged annual growth of 2%, and earnings have averaged 15% over the past year. The company's recent P/E ratio has been around 38 -- just half the industry average of about 76. Zoetis' forward-looking P/E, based on next year's earnings, is less than 17.

Panera Bread (NASDAQ:PNRA)
Offering refreshing alternatives to artery-clogging burgers and fries, Panera continues to spice things up in the fast-casual restaurant space. The company has built its reputation on its fresh products, healthy menu offerings, and compassion for its customers and community. Unlike competitors that have focused on pricing promotions, Panera has managed to command higher prices as it enhances its menu. The company boasts no long-term debt on its svelte balance sheet and enjoys robust cash flow, allowing Panera to expand into new markets. Panera possesses massive global growth opportunities, as less than 1% of Panera's restaurants are currently located outside the U.S.

Over the past three years, Panera's revenue has averaged annual growth of 16%, and earnings have averaged 24%. The company's P/E ratio is around 27, which is in line with its five-year average P/E ratio. Meanwhile, the industry average P/E is close to 29. Panera's forward-looking P/E is less than 22.

Cummins (NYSE:CMI)
This Indiana-based company manufactures engines, power systems, and related technologies such as filtration, fuel systems, and emission solutions. Cummins is one of the world's largest manufacturers of diesel engines. The trucking fleet in the U.S. is historically old and in need of replacement. A pickup in demand for trucks will likely drive growth for Cummins. Also, the continued push for stricter regulations globally should drive sales of components to meet emissions and fuel-efficiency standards.

Over the past three years, Cummins' revenue has averaged annual growth of 8%, and earnings have averaged 12%. The company's recent P/E ratio has been around 18, while the industry average P/E is close to 20. Cummins' forward-looking P/E is less than 13.

Get started today
Don't let the April 15 deadline pass you by. Consider these three attractive growth stocks for your Roth IRA contribution dollars today. Make the time to fund a Roth IRA and secure your financial future today. Years from now, you'll be thankful you did.

Three more growth stocks worthy of your Roth IRA dollars
The one sure way to get wealthy is to invest in a groundbreaking company that goes on to dominate a multibillion-dollar industry. Our analysts have done it before with the likes of Amazon and Netflix. And now they think they've done it again with three stock picks that they believe could generate the same type of phenomenal returns. They've revealed these picks in a new free report that you can download instantly by clicking here now.

Nicole Seghetti has no position in any stocks mentioned. Follow her on Twitter @NicoleSeghetti. The Motley Fool recommends Cummins and Panera Bread. The Motley Fool owns shares of Cummins and Panera Bread. 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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