While your golden years might be decades away, it’s never too early to plan ahead, particularly with cheap retirement stocks to buy now. Usually, the basic formula for retirement plays focuses on fiscal stability, reliable growth, and passive income. Unfortunately, the best enterprise that meets these attributes tends to be pricey.
To mitigate this situation, you can instead target cheap retirement stocks to buy. And by cheap, we’re not talking about securities that are priced “low” for their own sake. Rather, these enterprises may be overlooked for whatever reason. But if you’re willing to step a bit outside your comfort zone, these ideas could be intriguing.
So, if you want to skip the line on that senior discount, these are the cheap retirement stocks to buy now.
|IBM||International Business Machines||$145.89|
Archer Daniels Midland (ADM)
Headquartered in Chicago, Illinois, Archer Daniels Midland (NYSE:ADM) is a multinational food processing and commodities trading corporation. Commanding a critical service, ADM fundamentally makes for one of the cheap retirement stocks to buy. Sure enough, it represented a top performer in 2022. In the trailing year, shares gained over 23% of equity value.
Not surprisingly, Archer Daniels Midland enjoys support from the analyst community. Wall Street experts rate ADM as a consensus strong buy. Further, their average price target hits $107.25, implying a nearly 23% upside from the time of writing. As well, the company carries a forward yield of 1.83%, which sits just under the consumer staples sector average of 1.89%.
Financially, ADM makes ranks among the cheap retirement stocks to buy because of its undervalued profile. Right now, the market prices shares of ADM at 12 times trailing earnings. In contrast, the sector average stands at 17.3 times. Moreover, ADM enjoys strong business quality based on its well above-average return on equity of 17.6%.
Hormel Foods (HRL)
Calling Austin, Minnesota, home Hormel Foods (NYSE:HRL) is a food-processing specialist. It features a long history, founded in 1891. One of the attributes bolstering Hormel is demand inelasticity. Irrespective of pricing fluctuations due to economic conditions, people must eat. And that bodes well for HRL, making it one of the cheap retirement stocks to buy.
To be fair, HRL dipped 6% in the trailing year. Nevertheless, analysts remain undeterred, pegging Hormel as a consensus moderate buy. Moreover, their average price target is $50.33, implying a potential upside of slightly over 8%. As well, the company carries a forward yield of 2.36%, again beating out the consumer staples sector’s average 1.89% yield.
Based on traditional financial metrics, Hormel provides an intriguing look for cheap retirement stocks. For instance, its Altman Z-Score hit 4.9, reflecting stability in its finances. Plus, the food enterprise enjoys strong profitability metrics. Finally, based on Gurufocus.com’s proprietary calculations for fair market value, HRL rates as modestly undervalued.
Although metals and mining firms don’t usually make the list of cheap retirement stocks to buy, people should arguably make an exception for Vale (NYSE:VALE). Based in Brazil, Vale is the largest producer of iron ore and nickel in the world, per its corporate profile. The latter commodity presents significant implications because of its integration into electric vehicle batteries.
Certainly, the “ifs” and “when” of EV integration spark much debate. However, what’s not debatable are the facts. For example, in the trailing year, shares gained slightly over 20%. Another fact is that at the moment, all six covering analysts rate VALE as a consensus strong buy. For full disclosure, because of the stock’s dramatic upswing, it’s already met its prior price target.
Moving forward, Vale offers an intriguing idea among cheap retirement stocks. Its forward yield of 3.2% beats out the materials sector average of 2.8%. Also, the market prices VALE at 7.7 times forward earnings. In contrast, the sector median stands at 13.85 times.
Phillips 66 (PSX)
Headquartered in Houston, Texas, energy giant Phillips 66 (NYSE:PSX) likely presents ongoing relevance because of its downstream enterprise. Specializing in the segment involving refining and marketing, Phillips 66 may benefit from ongoing social normalization trends. In particular, with high-profile companies demanding that their workers return to the office, traffic levels should increase. That should make PSX one of the lucrative cheap retirement stocks to buy.
Presently, covering analysts rate PSX as a consensus moderate buy. Though PSX already gained 18.5% in the trailing year, analysts anticipate shares hitting $122.42. This average target implies an upside potential of 19%. Further, on the passive income side, Phillips 66 offers a forward yield of 3.77%. It’s generous though admittedly a bit under the energy sector’s average yield of 4.24%.
Just as well, PSX objectively rates as one of the cheap retirement stocks to buy. Right now, the market prices shares of PSX at 4.7 times trailing earnings. In contrast, the sector median stands at 8.2 times.
One of the cheap retirement stocks to buy that also flies well under the radar, Marcus (NYSE:MCS) is an enterprise with two principal divisions: Marcus Theatres and Marcus Hotels and Resorts. Personally, I’m interested in the former. Because Marcus provides box office-based entertainment to more rural regions – you know, the places where millennials moved to because of cost-of-living reasons – MCS could be a surprise hit.
Granted, on paper, it doesn’t seem that way. In the trailing year, MCS gave up 11.5% of equity value. However, covering analysts rate Marcus as a consensus strong buy. Also, they anticipate a recovery, targeting an average price forecast of $21. This implies an upside of almost 36%. To be fair, though, it’s not a perfect play among cheap retirement stocks to buy. For instance, its forward yield sits at a paltry 1.29%.
Adding to the concerns, it’s not as if the box office represents a bastion of confidence as it is. However, the company’s earnings performance trend gradually improved from the abyss of the coronavirus pandemic. If you have many years before retirement, Marcus could be worth it on its long-term recovery potential.
An American producer of steel and related products, Nucor (NYSE:NUE) incurred a choppy ride throughout 2022. However, the net picture overall has been resoundingly positive. In the trailing year, NUE gained a remarkable 38% in equity value. For context, the benchmark S&P 500 index slipped 14.5% during the same period.
Despite its outperformance, NUE still ranks among the cheap retirement stocks to buy for those thinking long-term. For instance, the Biden administration’s initiatives to boost American infrastructure across the board should generally benefit NUE. As a small bonus, NUE carries a forward yield of 1.31%.
Still, for full disclosure, analysts apparently believe that most of the good news has been baked in. At the time of writing, NUE features a consensus view of hold. It also has an average negative price target of 8.6%.
Nevertheless, it’s difficult to ignore the value, especially if you’re thinking long-term. Currently, the market prices shares of NUE at 4.9 times trailing earnings, below the sector median of 8.15 times. Also, Nucar enjoys a strong balance sheet and excellent profitability metrics.
For many years, legacy tech giant IBM (NYSE:IBM) represented an afterthought in the digital innovation space. While its peers pushed into sectors such as cloud computing, IBM still had exposure to legacy hardware businesses. However, that’s a chapter in the past. Today, Big Blue embraces myriad innovations, not only including hybrid cloud initiatives but also the blockchain.
Another reason to consider IBM is that it makes for a great idea among cheap retirement stocks to buy. Presently, the iconic firm offers a forward yield of 4.53%. That’s a stout source of passive income. As well, IBM enjoys 29 years of consecutive dividend increases. Don’t expect management to give up on this status, even with the high 66% payout ratio.
Now, according to Gurufocus.com, the tech giant rates as fairly valued. Nevertheless, I believe it’s one of the cheap retirement stocks to buy now. For one thing, it has a forward PE of 15.1 times, well below the industry median of 24.4. As well, its price-to-projected-free-cash-flow ratio is 1.04 times, below the median of 1.57 times.
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.