Why are you investing? For most of us the ultimate goal is funding a nice retirement -- and the sooner, the better. To this end, the Motley Fool's in-house research arm reports the average American permanently calls it quits at the relatively early age of 62.
Problem: That's rather young. For perspective, your officially intended full retirement age (or FRA) for Social Security benefits is either 66 or 67 years of age, depending on when you were born. This FRA is also nearer the age most people say they're planning on retiring before they actually do so, as well as closer to the unspoken ideal age at which you've been able to save up enough money before you must start living on your savings.
Fortunately, it is possible to retire at such an early age without undermining your quality of life once you're done working. The key is buying and holding the right stocks to achieve an adequate amount of growth in a relatively short period of time. Namely, these tickers need to produce above-average growth without imposing above-average risk.
With that as the backdrop, here's a closer look at three stocks that could help find a comfortable retirement at 62 years of age.
1. PepsiCo
At first blush, PepsiCo(NASDAQ: PEP) doesn't look like a must-have investment. The beverage industry isn't a high-growth one, and yet it's still crowded thanks to its low barriers to entry. Never even mind that PepsiCo isn't even the biggest name in the business. That honor still belongs to rival Coca-Cola(NYSE: KO).
Dig deeper though. This may be one of the stock market's better-kept secrets.
Take how it differs from The Coca-Cola Company as an example. Whereas Coca-Cola's products are mostly made by third-party partners so the parent company can focus on what it does best -- marketing -- PepsiCo actually owns the bulk of its own bottling operations as well as production facilities for its Frito-Lay snack chip arm. Though this may mean more headaches and upfront costs, it ultimately provides the company with tighter control of its business. It also lowers its net operating costs, since it's not paying for bottlers' profit margins. This ultimately supports more consistent earnings and earnings growth.
Largely lost in all the noise is that this model is bearing more fruit for PepsiCo's shareholders than Coca-Cola's. Assuming you reinvested all the dividends both companies paid over the course of the past 30 years, you'd actually be far better rewarded for owning PepsiCo rather than Coke.
Credit a more aggressive stock-buyback program, too, which translates into faster per-share profit and dividend growth.
PepsiCo's dividend, by the way, has been raised every year for the past 52 years. It's unlikely this streak is going to end anytime soon, given the strength of the company's brand names.
2. Amazon
Amazon(NASDAQ: AMZN) is such a commonly suggested stock pick that it's almost become cliché. Don't dismiss this prospect simply because everyone else seems to own it though. All of its shareholders are holding it for good reason. And, with a market cap of nearly $2.4 trillion, there are plenty of shares to go around.
Yes, its cloud computing services business remains the top reason to buy and hold this name. Although Amazon Web Services only accounts for around 17% of the company's current revenue, it produces roughly 60% of its operating income. It matters simply because Goldman Sachs expects the global cloud computing industry to grow at an average annualized pace of 22% through 2030, when it should be worth roughly $2 trillion. Yet that's still not the end of the industry's growth.
In the meantime Amazon is doing something on the online shopping front that it's never really done in earnest: turning an ever-increasing profit. The company's e-commerce operations -- domestic as well as foreign -- have never been more profitable, in fact.
Data source: Amazon Inc. Chart by author. Figures are in billions.
There's still so much growth potential ahead, however. The U.S. Census Bureau reports that only about 16% of the United States' retail sales are online; the rest are still in-store/in-person. Similar figures apply outside the U.S. More of them could be online though -- and will be. Straits Research suggests the worldwide e-commerce market is set to grow at an annualized pace of 10% through 2032, yet will still account for less than half of all retail spending by that point.
Given this company's name has become nearly synonymous with online shopping in this half of the world, Amazon should be able to capture a large share.
3. Wolfspeed
Finally, add Wolfspeed(NYSE: WOLF) to your list of stocks that could not only make early retirement possible, but more comfortable.
It's not a household name and will probably never become one. There's an increasingly good chance you or someone living in your household utilizes its technology though, with more demand brewing.
See, Wolfspeed makes next-generation energy equipment that uses silicon carbide. Never heard of it? Just as the name suggests, this is carbon-hardened silicon, which improves the durability and performance of ordinary silicon. You'll find it used in everything from data centers to solar power systems to heat pumps, and more.
Perhaps its most exciting use, however, is within electric vehicle powertrains and EV charging tech. This material can handle the heavy-duty electrical loads the world's now regularly producing, especially now that batteries are delivering more volts and amps to electric motors or other power-consuming equipment.
It's not exactly a brand new science, to be clear. It's just that electrical engineers have only recently seen its potential and acknowledged that silicon carbide features prominently in the near and distant future. Manufacturers are still figuring out exactly how to cost-effectively integrate this solution though, leading to inconsistent revenue. Wolfspeed's top line for the fiscal year now underway, for instance, is expected to fall just a bit.
Take a step back and look at the bigger picture. The analyst community is calling for top-line growth of more than 42% next year before accelerating to 57% sales growth the year after that, once the silicon carbide train reaches full speed. In fact, Global Markets Insights says this industry is likely to expand by an average of 30% per year through 2032. Wolfspeed is a great way to plug into this development.
Don’t miss this second chance at a potentially lucrative opportunity
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Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. James Brumley has positions in Coca-Cola. The Motley Fool has positions in and recommends Amazon, Goldman Sachs Group, and Wolfspeed. The Motley Fool has a disclosure policy.
