Fortune: The Best Stocks to Retire On

After a bleak 2008, equities are looking up. But whatever the market, our trademark long-term portfolio can help you build a nest egg for a secure future.

1. GROWTH AND INCOME: Abbott Labs

Ticker: ABT
Market Cap: $69.5 billion
P/E Ratio: 13
Earnings Growth: 11%
Dividend Yield: 3.6%

Abbott Laboratories is nothing if not consistent. The pharmaceuticals and medical technologies giant has steadily increased dividends for more than a decade. Abbott achieved 16% earnings growth last quarter and boosted its dividend by 11%, but it's now trading at just 13 times earnings, compared with 19 times earnings one year ago. That's still a slight premium to its industry, but Abbot deserves it -- the stock has returned 4% over the last five years, vs. an average of 0.2%.

Investors balked when Abbott announced slowing sales of its blockbuster anti-inflammatory drug, Humira, but prescriptions have since rebounded. "We continue to have a high degree of confidence in management's ability to achieve the recently revised 2009 guidance of 15-20% growth for the drug," noted Cowen & Co. analyst Sara Michelmore in a recent report. "With the shares discounting a significant slowdown for Humira, we believe the risk/reward is attractive at these levels."

--Mina Kimes

2. GROWTH AND INCOME: McDonald's

Ticker: MCD
Market Cap: $66.7 billion
P/E Ratio: 16
Earnings Growth: 12%
Dividend Yield: 3.5%

There's a lot to love about the Golden Arches: free cash flow growth of 36% amid a global recession, steadily increasing profit and gross margins, and a price to earnings ratio of 16, down from 20 two years ago. McDonald's returns over the last year beat the market by 38 percentage points. But is there still juice left in its stock?

Absolutely, says Catherine Crain, a manager of the Dreyfus Core Equity Fund. "Going forward, growth outside of the U.S. is going to be much faster than it is within," she says. "McDonald's has a long way to go before it's fully penetrated in many of these markets."

--M.K.

3. BARGAIN GROWTH: Accenture

Ticker: ACN
Market Cap: $19.2 billion
PEG ratio: 0.99
Earnings Growth: 12%
Debt/equity ratio:

The cash-laden, debt-free consulting firm remains attractive despite the fact that demand for its services has declined as the recession deepens. Credit Suisse analyst Bryan Keane recently applauded Accenture's ability to sustain pricing, as well as its high free cash flow and low price to earnings ratio (the company is currently trading at 11 times trailing earnings, compared with an industry average of 14).

"With Accenture, you get better than average visibility because of its backlog," says Todd Ahlsten, manager of the Parnassus Equity Income Fund. "Their bookings have remained fairly strong, and they're part of a long-term secular growth trend -- solving other people's problems."

--M.K.

4. BARGAIN GROWTH: Cisco Systems

Ticker: CSCO
Market Cap: $113.8 billion
PEG ratio: 1.5
Earnings Growth: 11%
Debt/equity ratio: 0.28

Cisco's business clientele is still retreating, but CEO John Chambers recently announced that its customers' businesses are stabilizing -- a welcome sign of relief for investors in the networking company. Despite declining sales, Cisco still has more than $30 billion in cash. We remain convinced of the company's long-term growth prospects because of its crucial role in building internet infrastructures.

John Marchetti, an analyst at Cowen and Co., thinks Cisco is poised to outperform this year. "With customer budgets now set and a more stable operating backdrop, we expect revenue growth to return to more seasonal norms."

--M.K.

5. DEEP VALUE: Baker Hughes

Ticker: BHI
Market cap: $12.6 billion
P/E ratio: 7
Current ratio: 4.2
Dividend yield: 0.6%

When natural gas prices finally make a comeback, business should pick up for Baker Hughes too. In the meantime, the oil and gas services company should see healthy demand in its deepwater drilling business, offsetting declines in demand for its land and shallow-water drilling operations.

About 60% of the company's revenue comes from outside of North America, giving it exposure to global growth opportunities. Bake Hughes has long-term, deepwater exploration and production contracts with Brazil's Petrobras and Mexico's Pemex that should help the company ride out oil price fluctuations, says Bill Webb, deputy chief investment officer at Gluskin Sheff.

--Katie Benner

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