If you think the State Pension will give you a comfortable retirement, think again. Right now, those entitled to the full new version receive just £175.20 per week.
This meagre sum is why we at the Fool UK think putting money into investments sooner rather than later is important. The earlier you do, the better your golden years are likely to be thanks to the beauty of compound growth.
With this in mind, here are a few quality UK stocks that I think could be great additions to any retirement-focused portfolio.
Power up your retirement
First up is XP Power (LSE: XPP). Headquartered in Singapore, the firm designs and manufactures critical power control solutions for the electronics industry.
Although not immune to the pandemic, this month’s half-year numbers were anything but bad. Order intake jumped 45% to £145.8m over the first half of 2020, thanks in part to demand from healthcare clients. Confident that revenue will grow in the second half of the year, XP also decided to reinstate its dividend.
Of course, none of this has gone unnoticed by the market. Having more than doubled in value since the dark days of March, XP is a great example of why it pays to buy quality stocks when they’re on sale.
The fact that the shares are now far from cheap (30 times earnings) is, of course, something to bear in mind if — and it’s a big ‘if’ — you think markets could crash again in the near future.
Notwithstanding this, I suspect even those buying now will still make great returns in time for their retirement.
Aim-listed fashion giant Boohoo (LSE: BOO) fell out of favour with the market a few months ago following concerns over working conditions in warehouses supplying garments to the fast-fashion specialist.
Although it’s vital that any concerns are addressed, I sincerely doubt this episode will impact the company’s ability to grow investors’ wealth over the long term.
Based purely on recent trading, Boohoo is a business that’s hard to fault. A beneficiary of the lockdown, total revenue jumped 45% to almost £368m in Q1.
One big drawback with the company, however, is its valuation. A forecast price-to-earnings ratio of 43 is not something to be taken lightly, especially if more revelations emerge.
Like XP, however, BOO’s valuation arguably becomes less important the longer you plan to hold its stock. Those with five years or more to go until retirement could still do very well.
Integrated software and service company iEnergizer (LSE: IBPO) is my final pick of stocks capable of turbocharging your retirement nest egg. Nicely diversified, it has clients ranging from banks to gaming companies to healthcare firms.
Having fallen like everything else back in March, iEnergizer’s share price is now back to where it was at the start of 2020. A quick scan of its full-year results from June helps to explain this speedy recovery.
Back then, the company announced a 10.1% rise in total revenue (to $194.9m) and 28.7% rise in pre-tax profit (to $52.5m).
Despite these stellar numbers, iEnergizer still trades on forecast P/E of a little less than 16. That looks great value considering its rapidly improving balance sheet and the excellent (and rising) returns on capital employed it generates.
Expect this company to hit more investors’ radars if it manages to maintain its recent form.
The post The State Pension won’t give you a comfortable retirement but I think these UK growth stocks might appeared first on The Motley Fool UK.
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Paul Summers owns shares of boohoo group. The Motley Fool UK has recommended boohoo group and XP Power. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2020