6 Stocks That Could Save Your Retirement

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The economy's still shaky. Investors are scared. The markets aren't being friendly. How are you supposed to make money in an environment like this?

Stagnant markets are never easy to navigate, especially coming off a big rally like the one we saw during most of last year. Nevertheless, there are opportunities that smart investors can take advantage of. Even though they may not be glamorous, they're the most likely candidates to get your portfolio ready for your retirement, or any other long-term financial goal you have.

Ding the bling
You won't find the best stocks to save your retirement on the list of top-gaining stocks over the past few months. Sure, companies like PotashCorp and 3Par have seen strong advances after having been approached by potential acquirers. But the big money has already been made on those stocks, and combing through thousands of stocks to find a company that might be next in line for a major takeover is like searching for a needle in a haystack.

Nor should you automatically look for stocks that have dropped enough to land in what seems to be the bargain basement. Dell and Las Vegas Sands have each seen losses of 50% or more since the beginning of the recession, making them look more attractive to value hunters. But there are good reasons why these companies and many others like them could still be value traps, including loss of competitive advantages and corporate managers who haven't always made the smartest moves.

Both of these sets of stocks have gotten a lot of attention from investors looking for tomorrow's best stocks. But time and time again, history has shown that the best stocks for the future usually come straight of left field, where no one expects to see them.

Finding buried treasure
A lot of people -- myself included -- have been recommending big blue-chip dividend payers for those who are concerned about the market right now. There's a lot of merit to that, as some of the best known names in the market are also among those with the healthiest balance sheets and most stable prospects going forward. Consumer staples giant Procter & Gamble (NYSE: PG  ) isn't going to hit any home runs even by going abroad to cultivate new markets, but for solid growth and stable dividends going forward, you'll have to look hard to find a better choice.

To give you some more ideas to think about, I turned to the investors in our CAPS community for their insight. Specifically, I looked for small to midsized companies trading at reasonable multiples to earnings, and which haven't had big price swings over the past year. I also wanted to focus on stocks that paid dividends, that weren't too large, and that had favorable ratings from CAPS members, but weren't so widely followed that everyone already knew about them. Here are some of the stocks I came up with:


Trailing P/E

Dividend Yield

CAPS Rating / Number of Active Picks

Tyco Electronics (NYSE: TEL  )



**** / 175

Valspar (NYSE: VAL  )



**** / 89

AGL Resources (NYSE: AGL  )



***** / 182

Piedmont Gas (NYSE: PNY  )



***** / 169

Teleflex (NYSE: TFX  )



**** / 99

WGL Holdings (NYSE: WGL  )



***** / 69

Source: Motley Fool CAPS. As of Aug. 30.

From telecommunications electronics to paint, medical devices to energy, these six stocks represent a good cross-section of the overall economy. They're all reasonably priced without being blue-light specials, and none of them have sky-high dividend yields that so many people are flocking to. In fact, most of them have largely avoided the gaze of investors entirely.

If you look back, you'll notice that most of these companies have a good track record of performance. Tyco's shares have performed the worst, having been spun off from parent Tyco International near the market's highs in mid-2007, and suffering from being mired in the health-care sector. But the others have been around for a long time, and put in substantial gains year in and year out. 

AGL, Piedmont, and WGL have all benefited from the rise of energy-related stocks over the past 10 years. Teleflex brings a broad, almost Buffett-esque combination of businesses to investors, ranging from medical devices to aerospace cargo handling, recreational boat motors, and oil exploration products, and it's seen modest gains in revenue recently. Valspar makes paint and wood coatings, and it's found ways to reap stock gains even through the housing bust. Solid, unobtrusive companies like these won't show up on many investors' radar screens, but that only makes them more attractive for the Fools disciplined enough to dig for them.

Get on the road to retirement
Right now, it's just as important to preserve your capital as it is to make it grow. Fortunately, though, you don't have to choose between one or the other. With the right stocks, you can both protect your portfolio and set yourself up for good-sized gains during the next bull market.

This market is full of traps for the unwary. Let Bryan Hinmon steer you clear of this landmine stock.

Tune in every Monday and Wednesday for Dan's columns on retirement, investing, and personal finance.

Fool contributor Dan Caplinger saves as much as he can, one dollar at a time. He doesn't own shares of the companies mentioned. Teleflex is a Motley Fool Inside Value recommendation. AGL Resources and Procter & Gamble are Motley Fool Income Investor choices. The Fool owns shares of and has written covered calls on Procter & Gamble. Try any of our Foolish newsletters today, free for 30 days. Here comes The Fool's disclosure policy to save the day!

Read/Post Comments (8) | Recommend This Article (96)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 01, 2010, at 7:24 PM, DanielLong wrote:

    BRCD could be a safer bet for any one looking at the aquisitions in data storage like 3Par. It could be bought out perhaps higher than where it is, but if not, could still be a great value play.

  • Report this Comment On September 02, 2010, at 5:09 PM, gimponthego wrote:

    So true, Kahunacfa. We retired in '96 at age 50. I spent 35 years at CCU, which we started here in San Antonio. We named the stock after the station's unique position of being a 50K clear channel watt station..or Clear Channel. Every other station at the 1200 allocation has to cut it's power to 500watts from 1000 or 10,000 to allow our signal to cover the Western Hemisphere. Neat I think. We worked like slaves from top to bottom and ..going against the tenant of "don't put all your apples in one basket, bought 1,000 shares of company stock at the IPO price of $10 (no commission to employees) and every month put nothing but company stock in both my 401k and my private stash. This was back when a split Really meant something. I paid off the relatives and friends who helped with interest. When we retired after many years and many splits, CCU was trading at $88+ at the end of my last quarter there.

    We trade within my IRA only. For 14 years it's not only remained solvent, but made a pretty tidy profit if I do say so. So, going against putting only company stock in your 401k and your stash worked like a charm. And as you say, my wife starts S.S. next year. I've been getting disability for 14 years which keeps us in a new car every 3 years.

    I worked myself into an outside psychiatric hospital, yet survived...But I saved, and it paid off. Work and save but don't kill yourself doing it. I'm writing a book about Texas radio that will be published in 1014.

  • Report this Comment On September 03, 2010, at 7:23 PM, Ivyman34 wrote:

    Kahuna is of course correct, but the article really didn't seem to be aimed at current retirees. The last sentence in the second paragraph says:

    "they're the most likely candidates to get your portfolio ready for your retirement, or any other **long-term financial goal** you have..."

  • Report this Comment On September 03, 2010, at 8:10 PM, TMFGalagan wrote:

    @kahunacfa -

    You're of course correct; after you're already retired and no longer earning income from work, there's much less you can do to build wealth. Even if you don't get a 40-year head start, though, having a good mix of investments and saving as much as you can with whatever time you have left before retirement can get you into as good shape as you can.


    dan (TMF Galagan)

  • Report this Comment On September 03, 2010, at 8:13 PM, TMFGalagan wrote:

    @gimponthego -

    That's a great story! As risky as it can be to have a big part of your money in a single investment, the success you get when things work out really well is still inspiring. Congratulations on your early retirement!


    dan (TMF Galagan)

  • Report this Comment On September 05, 2010, at 1:41 PM, twosense wrote:

    @gimponthego -

    Your story would be very different if you worked for Enron. Who would have known.

    Fool on....

  • Report this Comment On September 05, 2010, at 2:17 PM, FoolFoolFoolAmI wrote:


    Dan must have been up against a deadline, and just tossed this info out for those Foolish Fans out there in Electron Land.

    So, Dan, What age group does this fit with? The Long, or Short term for those approaching retirement, or the Long Haulers?

    And, pray tell, what are your previous picks and how did they fare? And how did you come upon these selection? Darts?

    There are plenty of Fools our here, and many that scoff at such stories....Oh what a FoolFoolFooAmI

  • Report this Comment On September 08, 2010, at 10:26 AM, sagitarius84 wrote:

    I am betting my retirement on solid quality dividend stocks which raise dividends for many years:

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