5 Popular Stocks to Avoid with Retirement Money
The five stocks listed below are popular with individual investors, but our Retirement Stock RatingsSM system gives them failing grades. All five are rated F. Those grades could change in the future, but today, these stocks are best avoided by investors saving for retirement or already retired.
1. Tesla (TSLA)
Tesla is the perpetual battleground stock and perhaps the original meme stock. Long valued as a high-tech startup due to both the genius of its CEO Elon Musk and his cult-like following, Tesla is better left out of retirement stock portfolios today. The shares are highly volatile, EV producers face stiff competition from low-cost Chinese competitors, and if sentiment changes toward Musk or Tesla, the valuation risk is extreme.
2. Intel (INTC)
Intel, once the undisputed king of the semiconductor industry, has seen significant challenges in recent years, including delays in chip advancements and fierce competition from rivals like AMD and NVIDIA. While Intel’s valuation metrics are more reasonable than those of Nvidia and AMD, the big cash outlays required to catch up to the competition are hurting free cash flow as well as profitability. Intel’s failing grade may improve if it successfully turns around the business, but retirement stock investors should look elsewhere in the semiconductor space today.
3. AMD (AMD)
Advanced Micro Devices (AMD) shares have soared over the last 16 months as excitement over artificial intelligence builds. AMD lags behind Nvidia in AI-chip technology and market share, but constrained supplies mean both firms are benefiting greatly from surging demand for GPUs. AMD gets an F on our Retirement Stock Rating system because of its extreme valuation, highly volatile share price, and below average profitability metrics.
4. Walgreens Boots Alliance (WBA)
Walgreens has been a staple in the retail pharmacy sector but faces increasing threats from online competitors, reimbursement pricing pressure, and changing consumer behavior. Although the stock still offers a solid yield despite a recent dividend cut, the shares have been in a relentless downtrend. Profitability is weakening and debt is elevated. While a turnaround may be possible, there is no reason to try to be a hero in Walgreen’s shares. Retirement stock investors should take a show me attitude toward the stock.
5. Albemarle (ALB)
As a leading producer of lithium, Albemarle stands to benefit from the global shift towards renewable energy and electric vehicles. However, the stock is highly dependent on commodity price cycles, which can introduce volatility and uncertainty. For retired investors and those saving for retirement, weak profitability, poor timeliness scores, and low shareholder yield make it a stock to avoid with your retirement money.
To learn more about how we rate stocks for retirement portfolios click here.