The 25 Best Stocks to Buy for Retirement

The stock market is on a long-term downtrend as interest rates rise and inflation remains high despite a slight cool-off. Many retirement portfolios that invest in indexes such as S&P500 are down at least 17% year-to-date. That is even more awful when you add inflation to the equation.

Of course, no stock is immune to the downturn we currently face. Still, some stocks on the market are highly resistant to recessionary and inflationary pressures, and they have the historical performance to back that claim. There are also some highly oversold stocks with little room for more downside. Buying them now could pay dividends for decades, as market downturns have always been the best time to buy any stock.

Buying when everyone is selling pays off in the long run. It isn’t a coincidence that most well-known and respected investors are contrarians. Thus, if you are looking for a retirement portfolio that you wish to hold for the long term, now is the time to buy these discounted stocks.

I believe the following 25 are among the best stocks to buy for retirement:

• McDonald’s (NYSE:MCD)
• PepsiCo (NASDAQ:PEP)
• Shopify (NYSE:SHOP)
• Meta Platforms (NASDAQ:META)
• Netflix (NASDAQ:NFLX)
• Texas Instruments (NASDAQ:TXN)
• Taiwan Semiconductor (NYSE:TSM)
• GlobalF0undries (NASDAQ:GFS)
• Qualcomm (NASDAQ:QCOM)
• Broadcom (NASDAQ:AVGO)
• Alphabet (NASDAQ:GOOG, GOOGL)
• Microsoft (NASDAQ:MSFT)
• Walgreens Boots Alliance (NASDAQ:WBA)
• Apple (NASDAQ:AAPL)
• International Business Machines (NYSE:IBM)
• Merck (NYSE:MRK)
• O’Reilly Automotive (NASDAQ:ORLY)
• Crocs (NASDAQ:CROX)
• Amazon (NASDAQ:AMZN)
• Walmart (NYSE:WMT)
• Costco (NASDAQ:COST)
• TJX (NYSE:TJX)
• Flowers Foods (NYSE:FLO)
• Veritiv Corp. (NYSE:VRTV)
• Berkshire Hathaway (NYSE:BRK-A, BRK-B)

McDonald’s (MCD)

McDonald’s (NYSE:MCD) is a very recession-resistant stock and is one of the few stocks to have increased in value during the great recession. Even in 2020, MCD recovered very quickly despite being a restaurant chain, one of the worst affected sectors of the economy. Simply put, McDonald’s thrives in an environment of economic uncertainty. It is a solid business in a consistent long-term uptrend, making it a perfect stock if you wish to avoid volatility.

It is also a business that will stay relevant for a lifetime. My colleague Larry Ramer notes the following:

“…MCD has become such a core part of American culture — and consequently a magnet for lovers of American culture in much of the rest of the world — that its business is sure to thrive for decades to come.”

Moreover, the financials are stable, and McDonald’s has an annual dividend yield of 2.2%, strengthening the argument to buy it for the long term.

There is also a misconception that McDonald’s being a consumer discretionary business will make it vulnerable to economic turmoil. I’m afraid I have to disagree since previous recessions have proved quite the opposite. As higher-income customers start feeling the pinch, they start eating more at McDonald’s, causing the business to thrive.

PepsiCo (PEP)

If you want something more diversified, look into PepsiCo (NASDAQ:PEP). The company’s diversification strategy makes it a very stable business. Not only that, PepsiCo is diversified into many consumer staples brands, making its revenue sources very inelastic and resistant to economic downturns. 

Like McDonald’s, PepsiCo is on a solid footing and will remain relevant for decades. The company’s financials will reflect just that as it is on a stable, long-term uptrend, with revenue reaching $83.6 billion TTM in the last quarter, up 8.8% year-on-year. Moreover, PepsiCo has an annual dividend yield of 2.56% and reported a net income growth of 21.5%. With robust top-line and bottom-line growth, PEP is undoubtedly among the best stocks to buy for retirement.

Needless to say, PEP stock won’t give you multibagger returns, but it will certainly protect your assets and counteract inflation. It’s the perfect asset to hold if you simply wish to ride out the storm.

Shopify (SHOP)

Shopify (NYSE:SHOP) is a Canadian e-commerce platform that rose rapidly after the pandemic. From Feb. 2020 to its peak in Nov. 2021, SHOP stock grew by 218%, but it has had a dreadful year in 2022. YTD, the stock is down just slightly above 70%. However, the trend seems to be reversing as it is up 56% from its bottom of $25.6 after beating Q3 expectations.

Its top line grew at 21.6% in Q3, beating expectations by 2.3%, while its losses also beat expectations. That is great for the stock, as robust top-line growth will encourage SHOP to be valued at a higher premium.

Shopify has had exceptionally robust top-line growth since its IPO, and its elevated valuation throughout 2021 was due to its YoY revenue growth of nearly 100%. With the same metric on the march higher, investors won’t mind paying more for the stock. The Bank of Canada also hints at lower interest rate hikes as the economy cools off.

With those factors in mind, the outlook seems promising for Shopify going forward. I would not be surprised if the company delivered a net profit very soon, as its losses are at $158 million from $1.2 billion in Q2.

Meta Platforms (META)

Meta Platforms (NASDAQ:META) is a stock many investors view negatively due to the metaverse project going poorly. The stock is down more than 65% YTD as Meta spends extravagantly on a project only a handful of people are excited about, and it’s not something many would consider among the best stocks to buy for retirement.

However, I am not at all convinced that Meta will be a failed company. The metaverse may seem silly today, as it is in the very early phases of development, but there is no guarantee that it cant still turn out to be profitable a decade or so down the line. It simply might be ahead of the curve.

Let’s look at a prediction from 2010:

“Tens of millions of Americans will be using a social networking site far more flexible and useful and far less annoying than Facebook today. It may or may not be a vastly improved version of Facebook itself, but having a page on it will be as useful and nearly as common as having a phone. (80% of readers agree).”

Twelve years later, Facebook is still the most used social media platform if you exclude YouTube. However, even if the metaverse does fail, a $700 billion-plus decline in valuation for the company seems too overdone. We’re talking about a company that owns Facebook, WhatsApp, Instagram, and Messenger called the “Family of Apps.” All combined, it generated nearly $32 billion in operating profits in the first three quarters this year. In contrast, Meta lost a little above $9.4 billion this year from Reality Labs. That’s far from being unsustainable.

Netflix (NFLX)

Netflix (NASDAQ:NFLX) is another tech stock battered by the bear market. Down 48% YTD, it has pulled off a strong recovery after introducing more revenue sources and improving its monthly active user (or MAU) count. Despite the recent surge in its price, it is still a stock with much more upside in the future due to slowing but consistent revenue growth and steady subscriber count.

I argue that NFLX stock seems very oversold when comparing the stock price to pre-pandemic metrics. In Q4 2019, Netflix’s subscriber count was 167 million, and quarterly revenue was at $5.5 billion. The stock price then was around $320. Fast forward to Q3 2022, with the subscriber count at 223 million and revenue at almost $8 billion. The only thing that hasn’t changed much is NFLX’s price.

Of course, one might argue that its 30%-plus top-line growth back then contributed greatly towards Netflix’s valuation. Admittedly, it has slowed down a lot. But investors should also remember the massive boost Netflix got from the pandemic. It is quite surprising that revenue isn’t plunging but still growing at a slower pace, and Netflix has retained most of its pandemic customers. The stock’s price chart says very well that investors are quickly regaining faith.

Texas Instruments (TXN), Taiwan Semiconductor (TSM), and GlobalFoundries (GFS)

Texas Instruments (NASDAQ:TXN), Taiwan Semiconductor (NYSE:TSM), and GlobalFoundries (NASDAQ:GFS) are semiconductor manufacturing stocks and follow a similar trajectory. Although the past few months have been terrible for these stocks, the trend is starting to reverse, and they’re becoming very good buying opportunities.

Admittedly, I was pessimistic about semiconductor stocks after the demand for GPUs fell. However, all of them have beaten their revenue expectations and continue to grow. For example, TSM’s revenue growth has surpassed even 2021 metrics, and even Warren Buffet is buying after the news.

While TSM stock surges higher due to demand, I also expect GFS and TXN stocks to be great long-term bets. They could even outperform Taiwan Semiconductor due to the CHIPS act. They are both American companies that qualify for billions in subsidies.

Of course, these stocks naturally move with the rest of the market and could see more downside. However, if you are looking to hold long-term, Semiconductor stocks are among the best stocks to buy for retirement. Texas Instruments, Taiwan Semiconductor, and GlobalFoundries reported YoY top-line growth at 13%, 36%, and 22%, respectively. Those are robust numbers that’ll make these stocks continue to trade at a premium.

Qualcomm (QCOM) and Broadcom (AVGO)

Although Qualcomm (NASDAQ:QCOM) and Broadcom (NASDAQ:AVGO) are considered semiconductor stocks, they do not manufacture a meaningful amount of semiconductors. Instead, they design semiconductors and manufacture them through partners such as TSMC. They produce and sell a variety of technological products.

These stocks have outstanding financials and are undervalued despite the recent stock market rally. Broadcom has revenue growing at 25% YoY. The robust growth should cause AVGO stock to trade at higher levels in the long run. On the other hand, Qualcomm is even more undervalued, with a price-earnings ratio of 11x and 22% YoY quarterly revenue growth.

Conversely, these stocks won’t technically qualify for the CHIPS act as they don’t manufacture their own chips. However, their growth is robust enough to make this list among the best stocks to buy for retirement.

Alphabet (GOOG, GOOGL)

Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is undoubtedly among the best stocks to buy for retirement, as the Internet is incomplete without this company. As many of my colleagues have already pointed out, Alphabet owns the two most popular websites on the internet: Google.com and YouTube.com. With GOOG and GOOGL stock declining 32-plus YTD, I consider Google a low-risk, high-reward investment.

GOOG and GOOGL stock trading below $100 is a once-in-a-lifetime buying opportunity. Alphabet is an evergreen business that is arguably the best tech stock to buy for long-term gains. Sure, its bottom line has declined quite a lot due to the fall in advertising revenue, but the economy will inevitably roar back, and so will Alphabet’s ad sales.

Gurufocus.com reinforces my view about Alphabet, rating GOOGL as “Significantly Undervalued” with a price target of $140. That’s a 42% upside. By 2026, we could be looking at nearly 100% upside on average.

Microsoft (MSFT)

Microsoft (NASDAQ:MSFT) is another evergreen tech stock that is among the best stocks to buy for retirement. If you are a white-collar worker, you are almost guaranteed to have used a Microsoft product. You might even be reading this article on the Windows operating system. My argument is that this company is essential for most people and won’t be going under the radar anytime soon. It’s elusive at best to run a business without any Microsoft products.

The company appeals to individual and corporate customers with a vast range of products. Microsoft has Bing, Edge, Windows, Office, Outlook, Skype, Teams, OneDrive, cloud services, and even games. That’s just software. It also sells many hardware products such as computers, computer accessories, Xboxes, Xbox accessories, and networking hardware. This mega-cap simply has too much potential not to be included in a retirement portfolio.

In addition, the market downturn has made MSFT decline by 28% YTD and presents a very attractive buying opportunity at $240 per share. Much like Alphabet, Microsoft’s net income has also shrunk, albeit slightly less, as it does not depend too much on ad revenue. However, its top line still grew by double digits, and Microsoft plans for more layoffs to increase its profitability. Finally, the stock also has an annual dividend yield of 1.1%, which will add to any long-term gains.

Walgreens Boots Alliance (WBA)

Walgreens Boots Alliance (NASDAQ:WBA) is among the best stocks to buy for retirement as it lingers at $40 per share despite a promising outlook. The company is a retail pharmacy business, which much more inelastic than some of the tech companies I’ve mentioned above.

The past few years have not been good for WBA stock, as it is down nearly 60% since its peak in 2015. Its share prices in 2022 are also the same as in 2001. With that in mind, it is easy to see why WBA is trading at a PE ratio of just under 8x. Moreover, its financials did outdo expectations, but the metrics are on a downtrend.

Conversely, my argument for putting WBA stock on this list is due to its long-term expansion plans. The company’s management is steering Walgreens towards a healthcare business in addition to a retail one. It invested $5.2 billion in VillageMD last year, planning to offer full-service primary care with primary care physicians and pharmacists in one place. The company is planning 1,000 such locations by 2027. VillageMD itself is also planning an IPO, a company in which Walgreens Boots Alliance has a 63% stake.

Furthermore, Walgreens Boots Alliance is a dividend aristocrat yielding 4.75%. Combined with its promising prospects and a low earnings multiple, I see the stock price being much higher in a few years.

Apple (AAPL)

Apple (NASDAQ:AAPL) is a must-buy for any retirement portfolio due to the business’s relevancy. AAPL outperformed most other tech stocks and continues to beat expectations due to its products being in high demand. Not only that, the company is still hiring and expanding its workforce while most other tech companies are cutting back.

Many people still have money, especially the wealthy who love Apple products, so it’s not hard to see why the company continues to be resilient. Its top and bottom line grew 8.1% and 0.8% YoY in Q3, and its fundamentals are solid.

On the contrary, I do have some concerns about AAPL’s short-term value due to declining profit margins. The stock could be in for a correction once the rate hikes start to fully impact the economy and earnings take a hit. It is a well-known fact that markets bottom a few months before a recession ends; thus, if we are still in one, there could be more pain ahead. However, AAPL is still a steal at this price if you are investing for the long term.

IBM (IBM)

If you are looking for more stability, IBM (NYSE:IBM) is something you should consider in your portfolio. Don’t get me wrong; Big Blue isn’t something that will give you much upside as it’s struggling to retain its earnings and has been outperformed by the broader stock market for the past decade. What it will give you, though, is exceptional stability and a healthy dividend yield.

Moreover, it is slowly starting to turn a corner by shaping the business around cloud computing, AI, and even a blockchain platform. If it continues its transition, IBM might no longer be an aging company a few years later.

We are already seeing this transition pay off, as its hybrid cloud segment is becoming the driving factor of IBM’s growth. In Q3, the hybrid cloud segment had a revenue growth of 15%. In comparison, software and consulting grew at 7% and 5%, respectively. Moreover, the Q3 earnings report surpassed expectations, and IBM looks like a bargain among the best stocks to buy for retirement, considering its non-GAAP earnings multiple. These positive tailwinds can steadily carry this stock higher.

Merck (MRK)

As Merck (NYSE:MRK) steadily trends higher despite broader economic headwinds, it is becoming an attractive buy for retirement portfolios. The company has robust top-line growth of 13.7%, an attractive dividend yield of 2.65%, and a compelling PE ratio of 16.9x. Furthermore, it is also a pharmaceutical company, an industry with very little price elasticity. Therefore, in the case of a recession, MRK stock is unlikely to disappoint.

Furthermore, Merck is partnering up with Moderna (NASDAQ:MRNA) to develop a melanoma vaccine jointly. With more than 1.4 million Americans living with melanoma and nearly 100,000 being diagnosed yearly, this vaccine will be a great source of profit for both companies.

Simply put, there is not much else to say about MRK except that it is a fairly valued stock that’ll give you stable returns for the foreseeable future. Its financials are on a solid footing, and I expect it to continue on its steady uptrend. The dividend is the icing on the cake, making MRK among the best stocks to buy for retirement.

O’Reilly Automotive (ORLY)

O’Reilly Automotive (NASDAQ:ORLY) is another solid stock for your retirement portfolio. This company is an auto parts retailer that operates 5,911 stores in the U.S. and continues to expand despite broader economic headwinds.

The biggest factor positively impacting O’Reilly Automotive is that Americans are holding on to their aging vehicles for much longer. The average age of cars in the U.S. increased to 13.1 years in 2022, and that uptrend will continue as the economy cools off. As a result, business is booming for O’Reilly as more people require vehicle maintenance.

In Q3, the company reported stellar earnings beating earnings-per-share estimates by 7.8%. The top line is also up 9.2% YoY. Up 18% this year, a market downturn is nowhere to be seen for ORLY. This business has almost everything going right for it, and if the company improves its profit margin in the future, we are looking at a lot of gains.

Crocs (CROX)

Crocs (NASDAQ:CROX) is surging higher after a 73% decline from its peak. The company’s Q3 earnings report beat EPS by 13.7% and revenue by 4.4% and is now nothing short of a bargain. YTD, CROX is still down 28%, but I believe it will trend much higher in the long term as the business has some positive tailwinds to consider.

I wrote the following about Crocs in May this year: 

“The stock seems oversold as its value has declined over 70% after the company announced its acquisition of HEYDUDE for $2.5 billion. Crocs remains among the most popular brands for teens despite the company’s recent downturn. Crocs’ recent earnings report was unsatisfactory due to its net income decline. However, its P/E ratio remains low, and the company’s high revenue growth can still make it profitable. Once supply chain disruptions ease, CROX stock will likely deliver a strong recovery from its current downturn.”

It is now halfway through Nov. and the stock is up more than 78%, has returned to profitability, and is delivering a strong recovery from its downturn. I believe there are still more gains in the long term.

Amazon (AMZN)

If Amazon (NASDAQ:AMZN) were an e-commerce pure-play, I would not be putting it on this list of the best stocks to buy for retirement, as Shopify would be a much better pick. However, Amazon is diversified enough to remain a relevant business for decades, and investors should consider adding AMZN to their retirement portfolios.

Amazon has a lot of promising segments that can drive growth once the economy roars back. This includes Amazon Web Services (or AWS), which dominates the cloud computing segment; Twitch, the most popular live streaming platform; Audible, Alexa, and a lot more. Both its top and bottom lines are making a turnaround on a quarterly basis while the stock price is at pre-pandemic levels. The stock is down 48% this year, and now is a good time to start buying if you wish to hold for the long term.

Walmart (WMT), Costco (COST), and TJX (TJX)

Walmart (NYSE:WMT), Costco (NASDAQ:COST), and TJX (NYSE:TJX) are three retail stocks I’d recommend adding to your retirement portfolio for more stability. Except for COST, both WMT and TJX stocks are up this year and have resisted the volatility in the market quite well. Of course, these stocks could be in for a correction if the downturn deepens, but they are great bets for long-term resilience.

Inflation is starting to cool, but without a Fed U-turn, there is still a significant risk of a recession. Thus, retail stocks shouldn’t be left out of your portfolio. For a retirement portfolio, Walmart and TJX have much more going for them than Costco. TJX and Walmart are the most undervalued of the three, with PE ratios of just under 23x, much less than Costco’s 36x. For TJX, that comes with a top-line miss this quarter, while Walmart suffers from an inventory glut.

Costco is swapping hands at a much higher premium due to its higher revenue growth. It certainly has robust financials that appeal to defensive investors, but COST is starting to look a little too expensive. On the contrary, it has historically outperformed both WMT and TJX, which is why I still think Costco is among the best stocks to buy for retirement.

Flowers Foods (FLO)

Flowers Foods (NYSE:FLO) produces and markets packed bakery food. It has solid fundamentals and has been reporting double-digit revenue growth in the last three-quarters of this year while many other companies are slowing down.

Top-line growth accelerated to 12.7%, beating expectations by 1.5%, while EPS grew 5.6%, beating forecasts. The only significant metric that is down is its profit margins, similar to most companies on this list. However, that is to be expected due to high inflation causing margin compression.

Flowers Foods has been on a steady long-term uptrend for the last two decades averaging a 10.8% annual return. It is an exceptionally stable stock that closely resembles the S&P500 index in gains but not so much during market downturns. In the past five years, FLO stock has gained 46% against the S&P500’s 52%, but it is significantly outperforming the index YTD. In 2022, it has gained 3.3%, while the S&P500 has shed 17.7%.

Furthermore, this stock also has a compelling 3.1% dividend yield, making it among the best stocks to buy for retirement.

Veritiv Corp (VRTV)

Despite growing 400%-plus in the last five years, 8%-plus this year, and having robust financials, Veritiv (NYSE:VRTV) trades at a very deep discount of 6 times earnings. This business-to-business provider is seeing its profits increase rapidly and reported a 142.5% YoY net income growth in Q3.

Of course, packaging firms aren’t among the economy’s growth drivers, which is why VRTV stock often falls under the radar. Firms like Veritiv are expected to grow around 4% CAGR this decade. However, Veritiv offers what most investors are looking for in 2022, which is value. Per forecasts, the exceptional growth rate will likely slow down next year, but the stock will stay deeply undervalued. That makes it among the best stocks to buy for retirement.

Finally, the downside risk is quite low here as it is already trading at quite a discount, but it is still one of the riskier market ideas on this list. I expect a strong upside for this company as inflation cools down and supply chain issues wane. But I won’t recommend allocating too much of your portfolio to this stock.

Berkshire Hathaway (BRK-A, BRK-B)

Writing about the best retirement stocks to buy, Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) is a must. The Oracle of Omaha is arguably the best investor to follow if you are looking for long-term gains, and the best way to do it is by buying Berkshire Hathaway. The company’s portfolio is highly diversified, with almost $300 billion worth of assets under management covering almost every industry.

The stock is on a long-term stable uptrend, and I see the growth continuing for the foreseeable future as Berkshire Hathaway has a significant stake in many essential businesses that’ll stay relevant for decades. That includes many businesses hand-picked by Warren Buffet himself.

Sure, the recent market downturn has increased its losses by quite a lot. But Berkshire Hathaway is sitting on an abundance of cash at $109 billion. That is a lot of cushion going forward that the company can use for stock buybacks and covering losses. Furthermore, the top line continues to grow alongside many of the company’s businesses. Most notably, insurance contributes 27% of the company’s revenues, a very inelastic segment.

On the date of publication, Omor Ibne Ehsan 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.