One of the most frequent questions I get asked is along the lines of "I opened an IRA -- now what should I invest in?" Unfortunately, there's no one-size-fits-all answer to this question. For example, investors who don't want to do much portfolio maintenance would do fine with some basic index funds.

On the other hand, if you have the time and desire to invest in individual stocks in your IRA, it can certainly be a smart idea. I own several stocks in my own IRA, but there are three in particular that I'm strongly considering buying more of now. Here's a rundown of my personal favorite IRA stocks, and why each one could be a smart choice now.

Jar of coins labeled retirement, next to stacks of coins and an alarm clock.

Image source: Getty Images.

Company (Symbol)

Recent Stock Price


Howard Hughes Corporation (NYSE:HHC)


Real estate development

Caterpillar (NYSE:CAT)


Heavy equipment



Real estate/Healthcare

Data source: TD Ameritrade. Stock prices as of 5/1/18.

A different kind of real-estate company

I'm a big fan of real-estate investments, but Howard Hughes Corporation is different than the rest.

The company develops master-planned communities, or MPCs, which essentially means large residential developments with lots of amenities. Think of master-planned communities as cities within cities. The company's Summerland community in Las Vegas has a bustling downtown district, golf courses, schools, parks, and more.

Here's why building MPCs is such a great business model. The company acquires large amounts of relatively cheap land -- for reference, Summerland is 22,500 acres. It then begins to sell pieces of this land to homebuilders, and the new residential neighborhoods greatly increase the commercial value of the land. Howard Hughes then develops commercial buildings, such as hotels and office buildings, to meet the needs of these communities and generates cash flow from them. These amenities then add value to the remaining, undeveloped land, which can then be sold for even more to homebuilders. It's a long-tailed cycle of value creation.

In addition to its core MPC business, Howard Hughes is also the developer behind the Seaport District in Manhattan and is breaking ground on a 1.4 million square-foot office building in Chicago this summer.

Another important point is that Howard Hughes Corporation is not a REIT. Unlike REITs, which generally distribute most of their income to shareholders, Howard Hughes invests all of its profits back into the business, self-funding its developments with no need to raise equity.

My favorite infrastructure stock

Heavy-equipment manufacturer Caterpillar has had a disappointing start to 2018, underperforming the S&P 500 by about eight percentage points.

CAT Chart

CAT data by YCharts.

However, Caterpillar stands to be a big beneficiary of worldwide economic growth and rising commodity prices. For example, Caterpillar's mining segment could see increased spending from mining companies if metals prices rise. Also, economic growth could translate into construction projects, agricultural investments, and more.

Caterpillar's underperformance can largely be attributed to a sell-off after first-quarter earnings spooked investors. Profits were strong, and Caterpillar raised its 2018 outlook, but the other side of rising commodity prices is higher expenses for Caterpillar (such as steel). There's some (legitimate) concern that Caterpillar's costs might grow faster than its pricing power will allow it to pass those costs to customers, but increased sales volume should more than make up for it.

An amazing long-term opportunity that's cheap because of short-term issues

Several areas of the real-estate industry are facing oversupply issues, and one is senior housing. In a nutshell, the long-term senior housing demand growth is expected to be huge, and with record-low costs of capital over the past few years, it's been cheaper to build new properties than to buy existing ones in many cases.

As a result of oversupply worries and general real-estate sector weakness, healthcare real estate investment trust (REIT) HCP, Inc. is dirt cheap right now, despite its long-term potential.

HCP owns over 800 healthcare properties, mainly senior housing, medical office, and life science facilities. The vast majority of its revenue comes from stable private-pay sources, as opposed to being dependent on Medicare and other government reimbursements.

Here's why you should care. The 85-and-older population is expected to double over the next 20 years and will keep growing strongly for decades after that. This is not only the key demographic for senior housing, but older Americans use medical services more frequently than the general population -- and they spend dramatically more when they do.

As of this writing, HCP trades for roughly 11 times its forward FFO (the REIT version of earnings) projections. This is a long-term growth opportunity that has simply become too cheap to ignore.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.