Retirement brings difficult challenges, including replacement of income that seniors earn during their service life. And from the traditional approaches to retirement planning, which includes investment in fixed-income assets, it’s difficult to cover expenses.
Notably, interest rates have declined significantly over the past two decades, thereby reducing income from fixed deposits or investment in bonds. The 10-year Treasury bond rates in the late 1990s floated around 6.5%, but now it is below 1.5%. And it is expected to decline further in the next five-ten years.
Additionally, uncertainty over the continuation of Social Security benefits over the long run could worsen situation for seniors. Notably, it has been estimated that the Social Security funds will deplete as soon as 2035.
Therefore, one should opt for an alternative investment that gives a steady, higher-rate income stream to supplant falling interest rates and sinking bond yields.
Equity investments are a brilliant way to create solid income streams for the long run. Though these are riskier, equities are the only asset class that can beat inflation and simultaneously offer capital appreciation over longer period.
For example, despite the recent coronavirus-led sell-off, shares of NVIDIA NVDA and Amazon.com AMZN skyrocketed 911% and 409%, respectively, over the past five years. That much return in a five-year time span is impossible in any kind of fixed-asset investments.
Take Advantage of Recent Sell-Off
There has never been a better time for long-term investors to buy shares for their retirement. The U.S. stock market has suffered steep declines in the past few weeks due to uncertainties stemming from the novel coronavirus outbreak. Each of the three major U.S. stock indices plunged into a bear market, sinking more than 30% from the recent highs.
Investors, particularly, are having a tough time sailing through the current market turbulence. However, the panic-driven sell-off is creating solid buying opportunities in markets with robust fundamentals and growth prospects. Once normalcy resumes, beaten-down and oversold stocks in these markets are expected to rebound faster with handsome returns.
In this regard, Technology stocks are among the few sectors with the highest possibilities of making fast recoveries. Nonetheless, given the volatile situation, picking stocks will be a daunting task right now.
Let’s dig deeper to understand what makes the tech space so fundamentally attractive.
What Makes Tech Stocks Promising Bets?
The Technology sector remains attractive owing to continuous digital transformations. Rapid adoption of cloud computing, along with ongoing integration of AI and machine learning, has been a major growth driver.
The accelerated deployment of 5G technology — the next-generation wireless revolution — is likely to fuel further growth. Moreover, blockchain, IoT, autonomous vehicles, AR/VR, and wearables offer significant growth opportunities.
Cheap Stocks Now Attractive Buys
Considering growth prospects of the tech companies, it makes sense to invest for long-term gains. Furthermore, the recent sell-off has significantly lowered the valuations of tech stocks, making those even more attractive for long-term investments.
Here, we have taken the help of the Zacks Stock Screener to shortlist four stocks that are incredible for retirement investment planning. These stocks carry a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Also, the stocks have a Value Score of A or B. Per the Zacks’ proprietary methodology, stocks with such a favorable combination offer solid investment opportunities.
Virtusa Corporation VRTU is a global provider of digital business strategy, digital engineering, and information technology (IT) services and solutions that help clients change, disrupt, and unlock new value through innovation engineering. Currently, the company is capitalizing well on the trend of the growing global demand for digital and cloud transformation.
This Zacks Rank #1 company has a Value Score of B. The long-term (3-5 years) expected EPS growth for Virtusa is pegged at 18%. The stock currently trades nearly 51% down from its 52-week high of $57.
Virtusa Corporation Price
Virtusa Corporation price | Virtusa Corporation Quote
Ultra Clean Holdings UCTT is riding on improvement in fab utilization, which is expected to bolster growth in the services division. Moreover, the company is well poised to combat the COVID-19 crisis-led supply bottlenecks on uptick in memory segment.
The company currently sports a Zacks Rank of 1 and has a Value Score of B. The Zacks Consensus Estimate for its long-term EPS growth is pinned at 14%. In addition, the stock’s current market price of $13.37 is down 55% from its 52-week high of $30.
Ultra Clean Holdings, Inc. Price
Ultra Clean Holdings, Inc. price | Ultra Clean Holdings, Inc. Quote
Lam Research LRCX has been benefiting from continued strength in logic and foundry spending. Transition to new data-enabled economy, in which DRAM and NAND continue to gain from density growth, is also boosting the company’s prospects. Further, robust adoption of 3D architecture is backing its non-memory segments.
Lam Research currently carries a Zacks Rank of 2 and has a VGM Score of B. Also, the long-term projected EPS growth rate for the company is 17.7%. Additionally, the stock is currently down 44% from its 52-week high.
Lam Research Corporation Price
Lam Research Corporation price | Lam Research Corporation Quote
CDW Corporation CDW is gaining from its robust product portfolio and device refresh cycle, which is driving the firm’s corporate and government end markets. Apart from this, CDW expects the Scalar acquisition deal to further fortify its footprint in Canada.
At present, CDW holds a Zacks Rank of 2 and has a Value Score of A. The company’s long-term anticipated EPS growth rate is 13.1%. The stock also currently trades 41% lower than its 52-week high.
CDW Corporation Price
CDW Corporation price | CDW Corporation Quote
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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Ultra Clean Holdings, Inc. (UCTT) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Lam Research Corporation (LRCX) : Free Stock Analysis Report
CDW Corporation (CDW) : Free Stock Analysis Report
Virtusa Corporation (VRTU) : Free Stock Analysis Report
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