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This is part 4 (final part) of the Fortune 40 Best Stocks to Retire on.

Part 1 | Part 2 | Part 3 | Part 4

We previously looked at the first 30 companies that made up the list in Fortune’s 40 best stocks to retire on. Here we look at the final 10.

Best Stocks to Retire On: No.31-40.

1. Plexus Corp (PLXS)
2. Tessera Technologies Inc (TSRA)
3. BP (BP)
4. Diageo (DEO)
5. Novartis (NVS)
6. Koninklijke Philips Electronics (PHG)
7. Sanofi Aventis (SNY)
8. Total S.A (TOT)
9. Unilever (UL)
10. Vodafone Group (VOD)

This last group consists of companies that are not on the popular buy lists but here are some comments on a few of the companies.

Tessera Technologies (TSRA)

If you go through the numbers for Tessera, you will immediately notice its crazy performance.

For the past 5 years it has averaged

• increased shareholders equity by 35%
• increased FCF by 52%
• CROIC of 17%
• a FCF/Sales of 27% (this means for every dollar of sales, it has converted 27c into FCF.)
• the other return margins are outstanding as well

This is probably all too well reflected in its share price of $16. By my guess, TSRA has to continue growing its cash at 40% for the current price to make sense. A more realistic growth of 13-14% yields a price of $9.40.

A company worth watching and studying.

TSRA Stock Price Estimates

• Stock price as of May 18: $16.07
• Discounted Cash Flow Fair Value: $9.58
• Graham Value: $24.22

BP (BP)

BP doesn’t seem to be as popular as Exxon (XOM) or Royal Dutch (RDS.A) but BP is also very consistent and throws off huge free cash flow. Their dividend yield is still at 7% and they had a profitable Q1 to get things back on track.

BP Stock Price Estimates

• Stock price as of May 18: $47.26
• Discounted Cash Flow Fair Value: $69.64
• Graham Value: $100

Sanofi Adventis (SNY)

Of the 10 companies listed, SNY seems to be the only one that can be considered cheap.

SNY is a pharmaceutical company engaged in the research, development, manufacture and marketing of healthcare products. The company does business in two activities – pharmaceuticals and human vaccines.

From their numbers I see that their FCF growth is rather low but the cash growth has been consistent for the past 4 years, their tangible shareholder’s equity has been rising very nicely and their CROIC numbers are great.

SNY could be an alternative to PFE for those that understand pharmaceuticals.

SNY Stock Price Estimates

• Stock price as of May 18: $30.51
• Discounted Cash Flow Fair Value: $48.76
• Graham Value: $54.29

Calculate Fair Value with Free Investment Spreadsheets

To calculate the fair value of stocks for yourself, you can download the free DCF investment spreadsheet, Ben Graham investment spreadsheet or get the premium version which includes many more features.

Fortunes 40 Best Stocks for Retirement – Full List

Fortune 40 Best Stocks to Retire on FULL

Disclosure

No positions in any stocks mentioned at time of writing.

This is part 3 of the Fortune 40 Best Stocks to Retire on.

Part 1 | Part 2 | Part 3 | Part 4

We previously looked at the first 20 companies that made up the list in Fortune’s 40 best stocks to retire on. Here we look at the next 10.

40 Best Stocks to Retire On: No.21-30.

1. Pfizer Inc (PFE)
2. Regal Beloit Corp (RBC)
3. UST (UST) – Being bought out.
4. VF Corp (VFC)
5. Adtran Inc (ADTN)
6. AVX Corp (AVX)
7. Fair Isaac Corp (FIC)
8. Global Industries (GLBL)
9. Grey Wolf (GW) – No longer trades
10. Penn Virginia Resource Partners (PVR)

As we get lower down the list, we now come upon companies that some may not have heard about before. Topping the Fortune best stocks list in this 3rd installment is Pfizer, a pharmaceutical company that has kept falling since 2000. Not to mention the well known fact that its patent for Lipitor, its bread and butter, will soon expire. Pfizer and its increased activity in acquiring companies has also increased debt. Cheap but not cheap enough to consider buying in my opinion.

Pfizer (PFE)

As I mentioned above, PFE is likely to encounter short term problems with the loss of Lipitor and trying to merge Wyeth into its operatoins.

Some points regarding their numbers:

• cash cow
• past 3 years sales have been flat
• good margins but fluctuates due to industry
• rising debt to equity

Stock Price Estimates

• Stock price as of May 5: $14.95
• Discounted Cash Flow Fair Value: $26.71
• Graham Value: $28.40

UST (UST)

UST is being acquired for around the mid $69’s. It’s always fun to see what the buyout price is compared to the investment spreadsheet. It just indicates that I am not being over optimistic or pessimistic for companies as a going concern.

Fair Value Calculations with Free Investment Tools

To calculate the fair value of stocks for yourself, you can download the free DCF investment spreadsheet, Ben Graham investment spreadsheet or get the premium version with many more features.

The First 30 Companies from Fortune’s List

Disclosure

No positions in any stocks mentioned at time of writing.

This is part 2 of the Fortune 40 Best Stocks to Retire on.

Part 1 | Part 2 | Part 3 | Part 4

We previously looked at the first 10 companies that made up the list in Fortune’s 40 best stocks to retire on. Here we look at the next 10.

40 Best Stocks to Retire On: No.11-20.

1. Cisco Systems Inc (CSCO)
2. McKesson Corp (MCK)
3. 3M Co (MMM)
4. Microsoft Corp (MSFT)
5. Parker Hannifin Corp (PH)
6. Walgreen Co (WAG)
7. Applied Industrial Technologies Inc (AIT)
8. Carlisle Companies Inc (CSL)
9. Cascade Corp (CAE)
10. National Presto Industries Inc (NPK)

These companies are all very well established in their respective industries. The four companies that I felt were substantially below their fair value were CSCO, MSFT, PH and CSL. MMM was also below its fair value but due to a bad year and declining margins and low FCF growth, I’ve left it out of the group.

All companies have only been based on price and historical numbers. Please make sure that you understand the business and its future roadmap to backup the quantitative fair values. These are not deep value or net net stocks where the downside is limited.

Cisco Systems Inc (CSCO)

This is a great company. Couldn’t find anything wrong with it in terms of numbers.

• Stock price as of May 5: $19.63
• Discounted Cash Flow Fair Value: $30.13
• Graham Value: $37.21

Microsoft Corp (MSFT)

A company that everyone knows already. Great margins, profits and cash generator.

• Stock price as of May 5: $19.79
• Discounted Cash Flow Fair Value: $32.17
• Graham Value: $43.50

Parker Hannifin Corp (PH)

Parker-Hannifin Corporation is a full-line diversified manufacturer of motion and control technologies and systems, including fluid power systems, electromechanical controls and related components.

PH was one of my earlier holdings that I bought a few months before the crash. I like the growth potential it has and the way it has been run. Already up 60% since the rally.

They have good FCF growth, CROIC and margins are increasing.

• Stock price as of May 5: $46.59
• Discounted Cash Flow Fair Value: $69.80
• Graham Value: $102.91

Carlisle Companies Inc (CSL)

Although the FCF growth and CROIC for CSL is on the low side, the margins are consistent and has a good margin of safety which is important for any stock to be a worthy of holding in retirement.

Carlisle Companies Incorporated (Carlisle) is a holding company for Carlisle Corporation. Carlisle is a diversified manufacturing company, which manufacture and distributes a range of products. They operate in the construction materials, transportation products and applied technologies segment that includes the food service products.

• Stock price as of May 5: $23.95
• Discounted Cash Flow Fair Value: $35.27
• Graham Value: $70

Fair Value Calculations with Free Investment Tools

To calculate the fair value of stocks for yourself, you can download the free DCF investing spreadsheet, Ben Graham investment spreadsheet or get the premium version with many more features.

The First 20 Companies from Fortune’s List

Fortune40-Best Stocks to Retire on-2

Disclosure

No positions at time of writing.