Stocks to Retire On

Now that we are heading toward a major recovery, business and market expectations are looking up. The market will be more reliable for the coming years. Experts have been forecasting what the long-term strongest stocks are going to be. Here are some of the single best stocks that long-term forecasting says would be good to boost your nest egg and partially retire on:

Abbott Labs, a pharmaceutical and medical technologies manufacturer, ticker ‘ABT’. Market Cap is $69.5 billion, P/E ratio is 13, earnings growth forecasted at 11%, and estimated dividend yield is 3.6%. Abbott Laboratories has shown consistency long-term and strength even in economic downturns. The company has steadily increased dividends for more than a decade. Abbott posted a 16% earnings growth last quarter and increased dividend by 11%, but it’s now trading at just 13 times earnings as opposed to 19 for last year. Stock has returned 4% over the last five years, versus industry average 0.2% Abbott saw sales of Humira drop, which scared investors slightly, 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,” a recent report by Cowen & Co. analyst Sara Michelmore read.

McDonald’s, famous “golden arches” burger franchise, ticker MCD. Market cap is $66.7 billion, P/E ratio is 16, earnings growth is 12%, and dividend yield is forecast at 3.5%. Even in the midst of a recession, McDonalds has seen positive cash flow at 36%. They have steadily increasing profit and gross margins and last year’s return beat the market by 38%. When asked if McDonald’s can continue at this pace, Catherine Crain, a manager of the Dreyfus Core Equity Fund said, “Absolutely. Going forward, growth outside of the U.S. is going to be much faster than it is within. McDonald’s has a long way to go before it’s fully penetrated in many of these markets.”

Accenture, an accounting firm, ticker ACN. Market Cap is $19.2 billion, PEG ratio is 0.99, and the earnings growth is 12%. Accenture remains at the top of the market despite the lack of demand caused by the recession. Accenture has the ability to sustain pricing, and has a high free cash flow and low price to earnings ratio. “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.”

Cisco Systems, a networking company, ticker CSCO. Market Cap is $113.8 billion, PEG ratio is 1.5, earnings growth is 11%, and the debt to equity ratio is 0.28. Cisco’s has also lost productivity to the recession but CEO John Chambers recently announced that things are stabilizing and customers are financially more secure, a welcome sign of relief for investors. Even in the decline caused by the recession, Cisco still has more than $30 billion in cash. Experts are confident in Cisco’s long-term growth and secure future because of its status at the top of the industry. John Marchetti, an analyst at Cowen and Co., thinks Cisco is in great long-term shape, saying, “With customer budgets now set and a more stable operating backdrop, we expect revenue growth to return to more seasonal norms.”

Baker Hughes, oil and gas services corporation, ticker BHI. Market cap is $12.6 billion, P/E ratio is 7, current ratio is 4.2, and dividend yield is 0.6% Natural gas prices will make a comeback, causing business to pick up for Baker Hughes. They are also one of the most likely companies to look into alternate drilling and production. About 60% of the company’s revenue comes from outside of North America, creating stability that only comes from exposure in a global market. Baker Hughes has long-term contracts in alternate drilling plans with companies in Brazil and Mexico, just the combination to curb the hit by fluctuating gas prices.