In previous commentaries, I've written about the importance of recalibrating your asset-allocation game plan as retirement draws near. After all -- and to mix and match my metaphors -- as you approach the 19th hole, you should become more concerned with preserving your nest egg than with taking on risks to grow its size.
That said, I certainly think there's a place for growth stock exposure in all but the most conservative investor's portfolio. It's simply a matter of allocating the proper sum -- less is more as you grow older -- and, of course, picking the winners.
Do tell
I'd argue that the best way to zero in on the kinds of growth stocks that won't keep you up at night (at least not much) is a GARP -- growth at a reasonable price -- strategy. I'd also favor the market's bigger fish, which is another time-tested way of keeping a lid on volatility. Put those orientations together and what have you got?
A fine time to go growth shopping.
Indeed, as a group, large-cap growth stocks have had a relative dry spell for quite a while now. Over the five years that ended with this past December, the Russell 2000 Growth benchmark -- a good proxy for small-cap growth stocks -- notched a total return of nearly 12%, while the Russell 1000 Growth index -- a benchmark comprising mainly growth-oriented big boys -- shed nearly 16.7% of its value.
Buy the numbers
If that has your inner contrarian licking its chops, good for you. And if you want a no-muss, no-fuss solution, you can always opt for a choice mutual or exchange-traded fund that traffics in large-cap growth stocks. If, however, you're a retirement saver of the stock-jock persuasion, it's time to do a little number crunching.
Given the GARP approach I advocated above, I think it's especially worth noting that racy big numbers Symantec (NASDAQ:SYMC), Boston Scientific (NYSE:BSX), and Electronic Arts (NASDAQ:ERTS) -- each of which has outperformed the S&P over the past five years -- are currently trading more than 25% below their respective 52-week highs. Amazon.com (NASDAQ:AMZN), Yahoo! (NASDAQ:YHOO), SanDisk (NASDAQ:SNDK), and BJ Services (NYSE:BJS) sport similar price discounts, despite the success they've enjoyed against the broader market -- and five-year earnings growth estimates in excess of 20%. All in all, these are firms with strong market positions, solid prospects, and prices that -- compared to their peers -- aren't trading at much of a premium.
Roller coaster
Make no mistake: Even growth overachievers can subject your portfolio to performance gyrations en route to market-besting gains. Before adding any of the aforementioned to your further-research list, then, be sure to paint your big retirement-savings picture. Know how much you can afford to put in large-cap growth, how much volatility you're willing to tolerate, and how diversified you need to be across the sector.
The Fool, of course, has you covered on that front: A free 30-day guest pass to Rule Your Retirement -- the Fool service that provides the inside scoop on savvy retirement planning -- is yours for the taking. Your pass provides month-long access to all of the Rule Your Retirement back issues, as well as its planning tools, how-to guides, and members-only discussion boards.
Those boards, by the way, provide a great forum for vetting your prospective investment choices with other similar-minded savers. So go ahead -- click here and snag your pass. A treasure trove of information -- and a razor-sharp community -- awaits.
Shannon Zimmerman is the lead analyst for the Fool's Champion Funds newsletter service and doesn't own any of the companies mentioned. Electronic Arts and Amazon.com are Stock Advisor recommendations. The Fool has a strict disclosure policy.
