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Most of us — except, perhaps, billionaires — would like to retire as millionaires. In fact, for many people, even $1 million might not be sufficient to support us in retirement in the kind of lifestyle we’re used to.
Social Security will be a valuable income stream for most of us one day, but the average annual benefit is around $20,000 annually at the moment, and relatively few are collecting more than $40,000. So it’s important for many of us to be saving and investing for retirement — starting as soon as possible.
Here are three stocks that can help you amass a million dollars for retirement.
Image source: Getty Images.
1. Pfizer
Pfizer (NYSE: PFE) has long been a somewhat familiar corporate name in America, but it has become much more of a household word now that tens of millions of doses of its COVID-19 vaccine have been given, with millions of booster shots given, too — and more on the way.
For its 2021 fiscal year, Pfizer’s revenue nearly doubled over year-earlier levels — clearly with the vaccine as a tailwind — while its net income nearly doubled as well. Looking just at the fourth quarter, revenue and earnings popped by 105% and 156%, respectively, year over year.
Those are extraordinary numbers, and they’re not likely to be the norm in the future. But Pfizer does have a lot going for it, including these factors:
Its COVID-19 vaccine is still heavily in demand, and the pandemic doesn’t look like it’s ending anytime soon.
Pfizer also has an antiviral drug, Paxlovid, to treat those diagnosed with COVID-19. It’s expecting the drug to generate at least $22 billion from sales worldwide in 2022, but it could be more.
Pfizer’s deep pockets mean it can buy smaller companies that have compelling products. It recently snapped up Arena Pharmaceuticals, for example, to get its promising anti-inflammatory drug, Etrasimod.
Like any major pharmaceutical company, Pfizer has a lot of drugs in development. Its pipeline recently featured 89 formulations, 27 of which were far along, in phase 3 trials, and another 25 in phase 2.
How well will Pfizer stock perform in your portfolio? There’s no way to know for sure, but my colleague Alex Carchidi thinks the stock might become a trillion-dollar company within 18 years. With a recent price-to-earnings (P/E) ratio of 13, well below its five-year average of 18, Pfizer shares seem reasonably to attractively valued these days.
2. Coinbase Global
If you’re suffering from a fear of missing out on the cryptocurrency craze but are having a hard time deciding which, if any, cryptocurrency to buy, here’s a terrific way to invest in crypto without actually buying any crypto — buy Coinbase Global (NASDAQ: COIN).
Coinbase is a major crypto trading platform — so if there’s lots of buying and/or selling of cryptocurrencies, it’s likely to profit from that. In its own words, “Approximately 89 million verified users, 11,000 institutions, and 185,000 ecosystem partners in over 100 countries trust Coinbase to easily and securely invest, spend, save, earn, and use crypto.”
The company’s fiscal 2021 saw its trading volume surge 766%, to $1.67 trillion, while company revenue popped from $1.3 billion in 2020 to $7.8 billion in 2021 — a gain of more than 500%. It’s aiming to grow by adding more cryptocurrencies to the ones it offers and is planning on an NFT marketplace as well, among other initiatives.
Coinbase is not without some risks, of course. For example, it faces competition from other crypto trading platforms, and its transaction expenses are eating up a greater portion of revenue — from 12% in 2020 to 17% in 2021. This is a new and dynamic investing realm, so if you invest in Coinbase, plan to keep an eye on it regularly to make sure it’s still performing as you expect. For example, it gets much of its revenue from transaction fees, but fees could fall over time, especially due to competition — traditional stock trades have fallen to nothing at many good brokerages, after all.
Still, give the company a closer look if you’re interested, as it does seem to have a promising future. Its shares were recently down nearly 60% from their 52-week high, making them more compelling with a recent P/E ratio of 13, well below last year’s 21.
If you’re still not sure about it, perhaps add Coinbase to your watch list, waiting for an even better price.
3. Alphabet
Then there’s Google parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). It’s already helped many people become millionaires — and it seems posed to mint more millionaires in the years ahead.
There’s much more to Alphabet than just Google, though, as it’s also home to a bunch of diverse businesses, some of which are extremely profitable. For example, it owns the widely used Android mobile operating system, along with YouTube and a cloud computing service. It also owns the Google Play app store, smart thermostat maker Nest, and Fitbit, among other things.
While it’s generally hard for massive companies to grow briskly, that hasn’t been the case for some, such as Alphabet. In its fiscal 2021 year, Alphabet saw revenue soar 41% over 2020 to $257.6 billion, while net income surged 89%. Its stock has grown so much that it has a stock split coming up.
A word of caution
These three companies are promising candidates for berths in your portfolio, but don’t count on any of them delivering a million-dollar retirement. They’re well positioned for splendid futures, but every company’s fortunes can change over time. For best results, we recommend spreading your hard-earned dollars across at least 25 companies and aiming to hang on for at least five years.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Selena Maranjian owns Alphabet (A shares), Alphabet (C shares), and Coinbase Global, Inc. The Motley Fool owns and recommends Alphabet (A shares) and Coinbase Global, Inc. The Motley Fool recommends Alphabet (C shares). The Motley Fool has a disclosure policy.
