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Do These Wealth-Making Stocks Belong in Your IRA?

The deadline for making contributions to traditional and Roth IRAs is fast approaching. Here at the Fool, we believe you'll be hard-pressed to find better investment vehicles to help you retire comfortably.

For those under 50, the limit for your traditional and Roth IRA contributions combined stands at $5,000, if you're eligible for both types of IRAs.

For a lot of people who are striving to make ends meet, $5,000 is a lot to save up. As I'll show, by using the five companies I'll be talking about, you can easily meet your contribution limit for next year.

I'll also touch on whether these companies would be worth putting your investment dollars into, and I'll offer you a special free report on the shocking, can't-miss truth about your retirement at the end.

SodaStream (Nasdaq: SODA  )
As a former teacher, I know that nothing helped me get through a rough day quite like a Diet Coke. In a typical week, I would easily down a full 12-pack. Had I bought a do-it-yourself soda maker from SodaStream, I might have had a cheaper alternative.

A check of my local grocery store shows a 12-pack now selling for $6.29. The cost for the same amount of a Diet Coke equivalent from SodaStream runs about $4.50. Assuming you drink one pack per week, here is what your savings would look like.

Source: Author's calculations.

Admittedly, the total savings -- about $93 -- isn't earth-shattering, especially when you have to factor in the purchase of the SodaStream machine during the first year. Plus, you can get Diet Coke a lot cheaper than $6.29 per 12-pack if you wait for sales.

When it comes to SodaStream as an investment, my mind simply isn't made up. Though it has many of the same characteristics of rocket-stock Green Mountain Coffee Roasters (Nasdaq: GMCR  ) -- the next company you'll read about -- I'm unconvinced that DIY soda is the same as coffee. Fellow Fool Rick Munarriz likes the stock's prospects, but for now, I'm on the sidelines.

Green Mountain Coffee Roasters
This company, the parent of the ubiquitous K-Cup coffee makers, offers java-lovers all of the convenience of fresh brewed coffee from their own kitchens.

A grande regular coffee at a New York City Starbucks usually runs about $2.29. You can get the same Starbucks blend in your own kitchen for just $0.83, and even though a K-cup serving is smaller, it's good enough for me. Here's how savings could stack up by using Green Mountain's brewer over the course of a year.

Source: Author's calculations.

Unlike Sodastream, this offers some pretty hefty savings. Over the course of a year, K-Cup users save around $530 that could be put toward retirement savings.

But when it comes to Green Mountain as an investment, I'm much more wary. Though failure certainly isn't guaranteed, the impending loss of patent protection and competition from others is enough to keep me watching from the sidelines.

Couponers
Both Groupon (Nasdaq: GRPN  ) and Travelzoo (Nasdaq: TZOO  ) offer subscribers deals on goods and services -- big and small. Groupon's offerings tend to run the gamut, and so it would be very difficult to pin down exactly how much one stands to gain on a yearly basis by using its services.

Though the same could be said for Travelzoo's Local Deals program, we could get a taste of the savings in store for vacationers by focusing on the company's core travel deals. For instance, just this week, Travelzoo has arranged a five-night, four-person vacation to Phuket, Thailand -- including food, entertainment, and accommodations -- for $299. That's a savings of $742. If your family was lucky enough to regularly book two such vacations per year, that would help add roughly $1,500 to your retirement savings.

Now, when it comes to these two companies as an investment, it's not quite the same screaming deal. Groupon is a hot mess, having had to restate its latest revenue numbers, and being on the hook for more money as it ventures into bigger ticket items. I'm making a bearish CAPScall on the company in my All-Star profile.

Travelzoo, on the other hand, seems to be much more promising. By combining its core travel business with a sustainable local deals service, I think it's on the right track, and I've put my own money -- and a CAPScall -- behind the company.

Zipcar (Nasdaq: ZIP  )
Finally, we have car-sharing pioneer Zipcar. The company has cars at the ready for city dwellers and college students on a moment's notice. For a flat yearly fee, and smaller hourly charges, Zipsters can use cars only when they need them -- and the cost of gas and insurance are included.

To figure out what savings for this service could be, I'm going to use a personal example. Upon moving to Chicago, my wife and I got rid of our car and relied on a combination of walking, our bikes, and Zipcar for transportation. When gas, insurance, car payments, and our regular usage habits were factored in, here is what the savings looked like.

Source: Author's calculations, assumes $4 per gallon for gas and 12,000 total miles driven in a 2005 Camry.

Clearly, this is where the real savings start to add up -- about $5,000 in my case. Though I've been frustrated by the stock's performance thus far, I've put my money and a CAPScall behind Zipcar as well. I think the company has the potential to exploit a paradigm shift in car ownership in America.

What's your next move?
Clearly, the examples above are just a sampling of the kind of savings you might experience. If there's any edge you can use to further your retirement goals, you should take it.

To that end, we've prepared special free report for just that purpose: "The Shocking Can't-Miss Truth About Your Retirement." Inside the report, you'll get the details on some oft-overlooked strategies to turbo-charge your IRAs. Get your copy of the report today, absolutely free!

Fool contributor Brian Stoffel owns shares of Zipcar and Travelzoo. You can follow him on Twitter at TMFStoffel.

The Motley Fool owns shares of Zipcar. Motley Fool newsletter services have recommended buying shares of Travelzoo, SodaStream International, Green Mountain Coffee Roasters, and Zipcar, as well as creating a lurking gator position in Green Mountain Coffee Roasters. The Motley Fool has a disclosure policy.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (4) | Recommend This Article (7)

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 April 05, 2012, at 1:12 PM, dbtuner wrote:

    Yet another MF article touting ZIP. You guys have been wrong on this from the beginning. Your tireless pumping is getting old.

    Calculate your savings on ZIP if you got in one really bad, high value accident and had to rely on their insurance.

    I predict your wife will leave you. What woman would want to depend on walking, taking a bike, or a Zipcar and be happy about it? She might "say" she's happy, but she really isn't.

  • Report this Comment On April 06, 2012, at 11:06 AM, Carioca58 wrote:

    dbtuner,

    I respect that you don't like ZIP. However:

    1) You didn't say why you don't like ZIP or why you disagree with the analysis.

    2) Brian's analysis is simplistic, but it is not harmful. He uses the same type of metric or rationale to evaluate the three stocks.

    3) MF has recommended the three stocks discussed above, even the two that Brian disliked, so you cannot say it is dishonest as you imply.

    So, I recommend you look elsewhere for the reason you are so unhappy today.

  • Report this Comment On April 06, 2012, at 2:33 PM, dbtuner wrote:

    ZIP has a lot of competition that is not factored into this analysis. ZIP has no IP to protect their technology. The barriers to entry are low. Even P2P car sharing can easily cut into their bottom line.

    I'm getting tired of MF constantly saying what a great stock ZIP is. The stock has gone straight down since the IPO.

  • Report this Comment On April 07, 2012, at 5:45 PM, crca99 wrote:

    ZIP has 3 competitive advantages to urban dwellers: locations a short walk away, essentially 24-hr service, and its challenge to car owners not airport renters. It is more convenient than trekking to a big auto plaza 30 min away by public transportation, paying an extra day rental because the place is not open on week-ends, or paying hefty ownership costs in insurance, parking, repair, and gas.

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Related Tickers

12/19/2014 3:56 PM
GMCR $137.26 Down -0.35 -0.25%
Keurig Green Mount… CAPS Rating: **
GRPN $7.93 Up +0.14 +1.80%
Groupon, Inc. CAPS Rating: *
SODA $20.80 Up +0.23 +1.09%
SodaStream CAPS Rating: ***
TZOO $13.59 Up +0.53 +4.06%
Travelzoo CAPS Rating: **
ZIP.DL2 $0.00 Down +0.00 +0.00%
Zipcar CAPS Rating: ****

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