40 Best Stocks to Retire On - Fortune

Fortune released a list of 40 companies in June 2008 that they labeled as the 40 best stocks to retire on. Although ValueExpectations.com’s research is focused on long-term investing, we believe reviewing companies on a ongoing basis helps to avoid potential pitfalls with bad investments and allows one to take advantage of companies that might be mispriced. For this reason we have ranked all companies in the Fortune 40 portfolio based on Valuation Attractiveness.

Good companies don’t always make good investments! If you believe this is a list of quality companies then that is a wonderful start. But understanding what you are paying for those companies is equally important. Few would argue that Mercedes Benz produces an excellent engineered vehicle and a quality product. However, if that Mercedes Benz cost $1,000,000, it may be a great vehicle, but not necessarily a good price.

As a review of the performance of this list since release, Fortune’s portfolio has returned an average of -28.64% since its release which is about 6.3% spread above what the S&P 500 delivered on average during the same time period. Although this portfolio did outperform the S&P 500, had you invested in these 40 companies in equal parts on the date of release, your $100,000 retirement nest egg would now be worth somewhere around $70,000.

Fortune 40 Companies To Retire On

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AFG's Valuation Model – Using AFG’s modified discounted cash flow model to measure the intrinsic value of a firm compared to its peers.

Comments

[Lightway]

Does the return calculation include dividend payouts, or is it capital appreciation only? It's also a tough calculation since the list was released in June 2008, and one of the worst meltdowns in history has occurred since then, so its performance vs. the S&P is respectable, given this only rates a year of savings.

The guidance to consistently review a portfolio is great advice however. Buying stable companies doesn't mean just putting them away and never looking at them again, as the author noted.

2009 May 06 09:27 AM

[woodsey]

Woodsey is not noted for good judgement and has dumped many on the list. I still like several, but I have other fish to fry.

2009 May 06 12:29 PM

[Paul Price]

Only companies that don't kill their customers were eligible.

2009 May 07 03:33 PM

[ValueInvestor88]

Just stick to buy PG & JNJ. Easy way to retire rich without any worry.

2009 May 17 08:06 AM