They suggested that Gilead Sciences (NASDAQ:GILD), Amgen (NASDAQ:AMGN), and General Motors (NYSE:GM)might all be undervalued stocks at the moment that can produce substantial returns over the long term -- making them perfect value stocks for a retirement portfolio. In short, the company's pipeline could end up producing multiple blockbuster drugs over the next four to five years. General Motors stock is solid as a rock Rich Smith (General Motors): Here's a value stock idea that will surprise exactly nobody: General Motors. Let me start off by stating the obvious: At five times earnings, and only a little more than five time forward earnings, General Motors stock looks ridiculously cheap. And to top it all off, General Motors pays a 4.4% dividend yield, which in and of itself is probably enough to cover the cost of the stock at this low P/E -- even if there were no growth at all expected. But, 10% growth is expected by many, and you can expect to find that growth coming from any number of directions, including the company's well-regarded Chevrolet Volt hybrid electric car, the all-electric Chevy Bolt, a new car-sharing subsidiary, and even GM's investment in ride-hailing start-up Lyft. All of this makes General Motors a value stock with a growth kicker. I can't imagine a much more attractive price at which to buy GM stock and stick it in your retirement portfolio. *Stock Advisor returns as of June 5, 2017 Dan Caplinger has no position in any stocks mentioned. The Motley Fool has the following options: short June 2017 $70 calls on Gilead Sciences.
When it comes to calculating how much you’ll need for retirement, numbers are hard, but concepts are easy. If we can put into words what we need the numbers to tell us, the process is much easier.
When I saw Prof. Robert Merton at a recent PSCA conference, he presented a compelling program on retirement saving. He discussed a lot of numbers, which he’s really good at, since he won a Nobel Prize in Economics and teaches finance at MIT. But one concept stood out: Funded Retirement Ratio.
Before you start pulling out your hair one strand at a time, bear with me on this concept. It tells you, based on how much you’re saving, rate of return and when you plan to retire, if you’re likely to have enough money.
Can a single number tell you so much? Well, yes, although there are plenty of variables such as how much is in your retirement kitty now, your expected life expectancy and projecting a realistic rate of return. It also depends on how you’re investing. If you’re investing everything in bonds and cash, you’re not going to have enough money.
Then there’s the volatility of returns. Stocks can drop as much a 40% in a year. Treasury bonds aren’t beating inflation. No investment…