Personal Finance

3 Top Stocks for Investing in a Roth IRA

When it comes to your Roth IRA, a good strategy is to aim for holdings that will grow briskly. That's because the money earned in a Roth IRA can be withdrawn tax-free. Thus, it's smart to park at least some stocks in your Roth IRA that have the potential to be big long-term winners.

Here are three compelling candidates:

Facebook stock has been on a bit of a tear since it debuted.

Facebook Inc. We all know that Facebook is a big growth story. Its revenue and earnings per share, respectively, have averaged annual gains of 50% and 37% over the past three years, while its stock has soared. Yet with a forward-looking P/E ratio near 33, the stock doesn't seem too pricey at recent levels.

To understand the company's great growth potential, you just have to review a few numbers. As of the end of 2014, it had 890 million active daily users -- nearly a billion people -- a level up 18% over the year before. Its mobile active daily users numbered nearly as much, 745 million, up 34% from the year before. Even more intriguing, more than 80% of its active daily users are outside the U.S. and Canada.

Once you appreciate its great reach, think about what Facebook knows about most of us users, and what it can do with that information. It's already making a lot of money from ads on its site -- remember, its service remains free for its billion-some users -- and it's moving into video ads. It can use its data gathered on users to target ads so that they're more likely to be effective. Facebook's advertising revenue soared 65% in 2014, to $11.5 billion, its number of active monthly advertisers hit a whopping 2 million, and it grabbed market share from titan Google . It's impressively effective in advertising, too, managing to significantly reduce its number of ads in 2014's fourth quarter while boosting their average price more than fourfold. Meanwhile, Facebook is even threatening eBay 's PayPal unit, adding a payment feature to its Messenger App.

Facebook can also leverage its broad base in others ways, such as by trying to enter the professional networking arena. And with annual free cash flow topping $3.6 billion, it has the ability to buy plenty of promising technologies. It has bought Oculus VR, for example, which offers virtual-reality technology, and the popular WhatsApp app as well. Most recently, Facebook bought TheFind, a personalized e-commerce search service that can strengthen its ability to offer targeted advertising to its users. The company has been a savvy acquirer -- think of Instagram, bought for $1 billion a few years ago and recently worth $35 billion, with some 300 million monthly active users.

Whether you buy these or other companies for your Roth IRA, look for strong and healthy growers, as any exponential growth that occurs in your portfolio will be available to you tax-free in retirement.

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The article 3 Top Stocks for Investing in a Roth IRA originally appeared on

Longtime Fool specialistSelena Maranjian,whom you canfollow on Twitter , owns shares of eBay, Google (C shares), and Priceline Group. The Motley Fool recommends eBay, Google (A shares), Google (C shares), and Priceline Group. The Motley Fool owns shares of eBay, Google (A shares), Google (C shares), and Priceline Group. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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