Investors who are stashing away shares in Royal Dutch Shell plc (NYSE: RDS-B), Procter & Gamble (NYSE: PG), and Celgene Corp. (NASDAQ: CELG) in retirement accounts are making the right choice, according to these top Motley Fool contributors. All three of these companies have intriguing opportunities that could send shares higher over the long haul, and that might make them valuable additions to your portfolio, too.
Fixing the balance sheet
But here's the thing: The company's debt load was even higher during the year. And that's the important takeaway. Shell is starting to dig itself out of its debt hole by selling non-core assets. As it travels down this path, meanwhile, it's going to rebalance its business with an increasing focus on natural gas -- an area in which it's already a dominant player. Natural gas is expected to grow in importance, taking share from dirtier energy options like oil and coal.
Royal Dutch Shell, a company that's been around for well over 100 years, looks like it's starting to get its financial house in order after an expensive, but potentially transformational, acquisition. As it strengthens its balance sheet, the security of its dividend improves, too. This is why now could be the right time to jump on Shell's 6.8% yield. For comparison, Chevron yields around 3.9% and Exxon 3.7%.
Shell's higher yield could be a nice boost for your retirement as you wait for the rest of the market to realize that the oil giant is, indeed, resolving the debt issue.
A new look at an old business
But the dividend giant is already doing much of what any billionaire activist investor might recommend. It just finished its biggest portfolio reboot in its history, which knocked down the number of brands from 166 to just 65. Costs are plummeting, and executives plan to slice a further $10 billion out of expenses over the next few years. The company's capital return program is also one of the most generous on the market --
The bold strategic moves appear to be working. Profitability is up, sales growth is accelerating, and P&G is poised to end a two-year earnings slump by boosting profits by around 5% this year. Its market-share slide, meanwhile, could be ending too: Management just raised its full-year organic sales growth target to 2.5% from 2%.
Thanks to its leading position across consumer staples like razors, diapers, and paper towels, P&G has long been a favorite of investors seeking steadily growing returns at unusually low risks. They moved away from the stock over the last few years as profits declined, but are rushing back in now that its business prospects are improving.
Ambitious projections from a trustworthy management
Celgene is the market-share-leading maker of drugs used to treat multiple myeloma (Revlimid and Pomalyst). It also markets top-selling blockbuster drugs used to treat pancreatic cancer (Abraxane) and psoriasis (Otezla). Soon, it may add
Management is one of only a few out there that offers up long-term forecasts, and its forecast for the future is downright ambitious. The company hopes to grow from about $13 billion in sales this year to $21 billion in sales in 2020. If it can hit that target, then it thinks earnings per share (EPS) could exceed $13. If so, then owning shares today could prove to be very profit-friendly for long-term investors.
Couple that forecast with a rock-solid balance sheet that includes $6.1 billion in cash and equivalents and another $1.8 billion in short-term investments, and you have a well-heeled company with a proven track record of success, and the potential for significant growth. That's a pretty compelling story.
Obviously, no one knows if Celgene can continue to deliver breakthroughs that allow it to stay ahead of its competitors. However, if the past is any indication, I'm not about to bet against it -- especially since 76 million baby boomers are going to be demanding increasingly more treatment over the next couple of decades.
10 stocks we like better than Celgene
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