3 Investments for Your New Roth IRAhttp://www.fool.com/investing/ira/2014/03/26/3-investments-for-your-new-roth-ira.aspx Asit Sharma
March 26, 2014
For Roth IRA participants, the bright side of paying taxes is getting to invest post-tax dollars in anticipation of tax-free withdrawals from investment earnings down the road. Generally, Roth IRAs are suited for taxpayers who have many years of employment income ahead, and thus a longer investment horizon. If you've recently opened a Roth IRA and are looking for investment ideas, here are three actionable long-term stock ideas to help you get started.
One way to participate in the airline industry
Is there a way to participate in this growing industry and remain somewhat insulated from its notorious boom and bust cycles? Try buying shares in a noncarrier company that participates directly in the industry's growth. Air Lease (NYSE: AL) purchases commercial aircraft and leases the planes to airlines. The company has an advantage over competitors in that it favors issuing its own corporate debt to buy aircraft free and clear, rather than using planes as collateral in a financed purchase. This provides the company more flexibility in optimizing lease rates over the long term, as opposed to private financing.
Air Lease may appeal to long-term investors because management is focused on a concept that basically boils down to a "young fleet with long leases attached," as chief operating officer John Plueger characterized it recently. Air Lease tends to sell its planes off as they age in order to maintain a relatively youthful fleet. Maximizing revenue and margin from a younger fleet with long leases helps Air Lease post quarterly profit margins in excess of 24%. The company also impressively grew year-over-year revenue by 31% in its last fiscal year.
Latch on to small-cap growth
Management plans to spend time in 2014 studying the company's opportunities to facilitate digital advertising. It believes that highly sought-after brands will be able to use its digital Web font technology for effective advertising across multiple devices and platforms. Monotype Imaging has excelled in recent years at adapting its licensed fonts to mobile devices, and a foray into digital advertising should help extend the company's growth.
This is a tiny company, with yearly sales of $166.7 million and a market capitalization of just $1.2 billion. But niche companies like Monotype Imaging can reward the patient investor. If you'd like a more diversified strategy for buying small-cap stocks, you can read up on a cost effective option here.
Invest in international real estate
SPDR Dow Jones Global Real Estate (NYSEMKT: RWO) is an exchange-traded fund, or ETF, that holds shares of various real estate investment companies. It has the attraction of dividing its holdings roughly evenly between the U.S. and the rest of the world, which theoretically provides stability to its returns. While you'll find representative investments from Europe to Japan in the fund's holdings, its largest position, at slightly less than 6%, is American mega-real-estate investment trust Simon Property Group (NYSE: SPG).
Income from the ET