- It’s never too late to start adding to your nest egg and these cheap retirement stocks can provide excellent bang for your buck.
- Leggett & Platt (LEG): A diversified manufacturer of engineered components that are delivered to the home and auto industries, Leggett & Platt is structured for long-term relevance.
- Walmart (WMT): Although Walmart has been suffering due to a poor earnings performance, WMT stock offers a sizable discount for long-term holders.
- Prudential Financial (PRU): Offering financial wellness and insurance services, Prudential is also one of the discounted cheap retirement stocks to buy right now.
- LyondellBasell Industries (LYB): Significantly undervalued, LyondellBasell’s plastics and chemicals business is boring, but pertinent.
- General Motors (GM): Though one of the cheap retirement stocks on the riskier end, General Motors demonstrates that Detroit is back and swinging hard.
- Macatawa Bank (MCBC): One of the cheap retirement stocks priced under $10, Macatawa Bank provides focused regional banking services in Michigan.
- Oaktree Specialty Lending (OCSL): Providing financing services for upper-middle-market companies, OCSL is risky, but provides a massive dividend yield.
With all the rumblings in the equities sector, the temptation for contrarian investors may be to focus on popular growth names. However, cheap retirement stocks also deserve some of the spotlight. The problem with taking advantage of the flavors of the week is that fundamental shifts in the economy could derail their businesses permanently. However, retirement-oriented investments tend to be built for the long haul.
Additionally, when you’re specifically focusing on cheap retirement stocks to buy, the framework already implies that you have the patience necessary to see these ideas marinate and rise steadily. On the other end of the spectrum, growth-exclusive names may be compelling discounts until they’re not. Again, it’s not out of the realm of possibility that such enterprises could sink to the abyss.
Finally, cheap retirement stocks are generally not as volatile as cyclical operators. Buoyed by consistent demand and relevant business models, companies whose shares are appropriate for retirees are better able to weather economic storms. And with that, here are the names on discount to consider:
|Leggett & Platt, Incorporated
|Prudential Financial, Inc.
|LyondellBasell Industries N.V.
|General Motors Company
|Macatawa Bank Corporation
|Oaktree Specialty Lending Corporation
Cheap Retirement Stocks: Leggett & Platt (LEG)
Hardly what you might consider a household name, there’s still a good chance that you’ve used Leggett & Platt (NYSE:LEG) products without even knowing it. A diversified manufacturer specializing in engineered components, Leggett & Platt’s acumen is integrated into various applications for the home furnishings and automotive sector.
On one end of the scale, the company is integral to the supply chain of the bedding industry, from providing raw materials to private label finished goods. On the other end, Leggett & Platt is a leader in seating comfort for the auto industry, providing the motor systems used in adjustable seats. In addition, the company has an aerospace unit, commanding expertise in exotic metals and demanding applications.
Fundamentally, LEG is attractive as one of the cheap retirement stocks as the underlying firm features very strong profitability metrics. A major highlight is its return-on-equity ratio of 25.7%, which is substantially higher than the industry median of 8.22%. Also, against a basket of valuation metrics, LEG is modestly undervalued.
It’s fair to say that big-box retailer Walmart (NYSE:WMT) is suffering from a mini-crisis. After a bit of a rough start to the year, WMT managed to climb higher in the early spring days. However, its most recent earnings disclosure imposed a painful wake-up call. Long story short, Walmart badly overstated consumer demand, one of the consequences being a nearly 25% increase in inventory.
Further, Walmart and the big-box competition failed to recognize the shift in consumer behaviors, with people preferring experiences over things. Naturally, people rushed for the exits, although this dynamic sets up an intriguing case for cheap retirement stocks. Basically, consumer demand could revert back to Walmart.
For starters, unforeseen circumstances, such as the pilot shortage, are making vacation plans nightmarish and costly. It’s quite possible that such terrible experiences could see other households cancelling their own vacation intentions until the coast clears.
Second and more importantly, Walmart’s everyday low pricing model is ideal for recessions. Therefore, don’t ignore WMT in your hunt for intriguing cheap retirement stocks to buy.
Cheap Retirement Stocks: Prudential Financial (PRU)
A leader in the retirement planning industry, Prudential Financial (NYSE:PRU) is itself an excellent name to pick up for cheap retirement stocks. Down nearly 16% on a year-to-date (YTD) basis and almost 10% over the trailing year, it might be time to consider picking up shares of a company that doesn’t really crater all that often.
Further, businesses like the life insurance sector may have received a sentiment boost of sorts because of the coronavirus pandemic. Prior to Covid-19 uprooting our normal daily schedules, the concept of debilitating pandemics was really a theme in history books or in Hollywood blockbusters. That even the mighty U.S. is vulnerable to catastrophic events may have convinced many folks to get their affairs in order, just in case.
Like the other cheap retirement stocks on this list, Prudential is a good deal. The company features decent profitability metrics and is priced attractively. For instance, PRU is priced at eight times forward earnings, which compares favorably to the industry median of 9.8 times forward earnings.
LyondellBasell Industries (LYB)
Arguably a classic example among cheap retirement stocks, LyondellBasell Industries (NYSE:LYB) tends to fly under the radar, largely because it’s boring to contemporary investors. However, boring should not be equated with irrelevant. Indeed, LyondellBasell’s plastics, chemicals and refining expertise makes the firm one of the world’s most valuable.
In particular, the company operates major refineries in the U.S., which process heavy, high-sulfur crude oil to the tune of approximately 268,000 barrels per day. Ultimately, these facilities produce gasoline and fuel components, low-sulfur diesel, jet fuel and lubricants. These segments have encountered increased demand as society returns to normal from the Covid-19 malaise.
Financially, LYB stock is among the most attractive, whether you’re looking for cheap retirement stocks specifically or just want to grab a great deal. The underlying company features solid strengths in the balance sheet and excellent profitability metrics, especially a return on equity at 52.4%. However, LYB also happens to be significantly undervalued.
Cheap Retirement Stocks: General Motors (GM)
The old General Motors (NYSE:GM) was junk, emblematic of the shoddy domestic cars that wore the various GM brands. The new General Motors is an entirely different beast. Featuring a reinvigorated focus on producing relevant and desirable vehicles, GM appears to have a bright future.
True, this is one of the cheap retirement stocks that presently deserves its low price because of worrying industry-wide headwinds. In particular, global supply chain issues and soaring inflation greatly trouble auto manufacturing and sales. While it’s not just GM’s problem, that hasn’t stopped the stock from hemorrhaging 46% YTD.
Still, the bigger picture is exceptionally enticing. With products like the all-electric GMC Hummer coming out soon, the iconic automaker is poised to make serious waves in the electric vehicle market. Also, on the combustion side, the eighth-generation Corvette is a thing of beauty.
Let’s not forget that GM is priced at below five times forward earnings, which is far more attractive than the industry median of 9.8 times forward earnings.
Macatawa Bank (MCBC)
In theory, a rising interest rate environment is positive for banking firms because they can charge more for their loan products. On the other hand, you can’t force people to absorb higher borrowing costs. Logically, if rates go too high, people and enterprises won’t borrow, thus contributing to a recession.
However, if you do want to take advantage of cheap retirement stocks tied to the financial sector, you might want to go regional. One name in particular is Macatawa Bank (NASDAQ:MCBC). Featuring fewer than 30 branch locations — all of them in Michigan — Macatawa has a diminutive footprint. However, for the next few years, that might be a positive attribute.
Unlike the major multinationals, Macatawa is entirely focused on the regional economy. Therefore, it’s largely insulated from global events that might hurt the big banks disproportionately. Also, Michigan itself benefits from demographic trends, with the state being popular with millennials. That means the region is much more viable than other places featuring unfavorable demographic dynamics.
Cheap Retirement Stocks: Oaktree Specialty Lending (OCSL)
Although Oaktree Specialty Lending (NASDAQ:OCSL) is one of the riskiest names among cheap retirement stocks to buy, it also at least partially makes up for this risk with its passive income potential. Featuring a dividend yield of 10.14%, OCSL is going to make prospective investors look twice. So, what’s the deal with the high yield?
Oaktree is a specialty finance company, specifically a business development company (BDC). Providing an important source of capital solutions for organizations that are too big to be classified as small businesses, but are too small to warrant an initial public offering, BDCs help firms in the critical phase of their enterprises.
Compared to the competition, Oaktree is arguably better positioned since it focuses on upper-middle-market companies. Before you fork over your money, you should be aware that BDCs usually don’t react well when interest rates spike too much. Second, OCSL is not the most fundamentally resilient name; rather, it’s attractive because of its sub-$10 price point.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.