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Two stocks I’d buy today to retire on

The best companies to buy for a retirement portfolio are those that have a robust competitive advantage and track record of creating value for shareholders. One such business is engineering group Goodwin (LSE: GDWN).

Growing business

Goodwin is a metalworking business operating through two segments, mechanical engineering and refractory engineering. Put simply, the company manufactures and machines metal parts for customers.

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Despite the uncertain economic environment, business is booming across the enterprise.

According to Goodwin’s preliminary results for the year ended 30 April, the forward order book stands at a “record” £165m, an increase of 94% year-on-year. On top of this, the firm has several “large long-term contracts” that are still to be placed. All in all, pre-tax profit increased 11% for the year to £14.7m and revenues rose 1.8%.

Goodwin might be a relatively small business with a market capitalisation of £250m at the time of writing, but don’t let this size deceive you. The company has a global footprint and added businesses in China and Thailand to the group during its last financial year. Just 22% of total sales came from the UK last year.

Over the past five years, as the firm has reinvested profits back into the business to drive growth, book value has risen at a compound annual rate of 11.3%. I think this growth is a testament to the company’s ability to create value for shareholders.

At the time of writing, shares in the group are dealing at a historical P/E of 21.4, which, in my opinion, is not too demanding considering Goodwin’s order book and record of creating value for investors. It also supports a dividend yield of 2.5%.

Brand power

I also reckon Moneysupermarket.Com (LSE: MONY) could be an excellent addition for a retirement portfolio.

What I like about this company is its market-leading brand. There are only really three major price comparison websites in the UK, and Moneysupermarket is one of them. Consumers know and trust the brand, and brands also trust the business to provide customers.

The company’s market-leading position means that it can generate fantastic profit margins. Last year, Moneysupermarket’s operating profit margin clocked in at 30.4%. Return on capital employed — a measure of profitability for every £1 invested in the business — hit 50%.

However, despite this profitability, shares in Moneysupermarket are only changing hands at a forward P/E of 20, falling to 18.4 in 2020 based on current City estimates for growth. Considering the company’s profitability, I believe the shares are worth around 25% more than the current price, which would give a P/E of 25. That’s without factoring in any future growth.

I think Moneysupermarket has the potential to grow earnings at a high single-digit rate for many years to come as more and more consumers turn to the business for money-saving deals, and management uses excess cash for acquisitions. On top of this growth, the stock currently supports a dividend yield of 3.1%.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Goodwin and 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.