In this article, we will be taking a look at 13 safe stocks to invest in. To skip our detailed analysis of current recession concerns in the US and more, you can go directly to see the 5 Safe Stocks To Invest In.
The Federal Reserve's July interest rate hike of 25 basis points that came on July 26 has brought inflation in the US up to levels of 5.25% to 5.5%. This is the highest inflation levels have been in the US in over 22 years, making the markets and investors worry about what more may lie ahead for them. Recession fears continue to plague the markets, with many investors worrying for their portfolios and rushing to pile their money into what is known as "safe stocks," that is, those stocks that manage to stay in the green despite overall market conditions being far from ideal.
What To Focus On After The Rate Hike
While traditionally, the sectors that have managed to perform well in colder market conditions have included those like consumer staples, utilities, and healthcare, another trend we are seeing this year is an ongoing tech rally led primarily by large-cap tech companies such as Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG). There are many reasons for this development, which include the rampant popularity of artificial intelligence for one. Considering this, investors should rest assured that while inflation may still be running high, they are not suffering from any lack of safe haven stocks that are continuing to battle on in a challenging financial environment.
Stock performance in these sectors is also not the only thing to count on at this moment. After the Fed's decision to hike interest rates yet again, Jerome Powell, the Chairman of the Federal Reserve, also noted in a following press conference that the Fed will do everything in its power to bring inflation down again. Here are some comments Powell made at this press conference:
"We're of course very focused on rates and our own policy. We're going to use our policy tools to get inflation under control. The implication is, you know, we will do what it takes to get inflation down. In principle, that could mean that if financial conditions get looser we have to do more. But what tends to happen though is that financial conditions get in and out of alignment with what we're doing and ultimately over time, we get where we need to go."
The Fed's Commitment To Lowering Inflation
In a statement at the beginning of this press conference, Powell noted that the Fed remains committed to its long-term goal of bringing inflation down to 2%. While he did not offer any definitive statement on whether the markets should expect to see further rate hikes ahead in the year, he did note that US policymakers will be taking a "meeting by meeting" approach toward interest rates moving forward. All in all, Powell's statement and the following press conference indicate that while inflation is not expected to go down any time soon, the Fed is doing its utmost to bring it back down to more optimistic levels.
In the meantime, investors are advised to focus their savings on safer options, such as high-risk, low-volatility stocks that have consistently performed well over the past few years. These include many large-cap companies that have made it to our list below and notably also include tech companies that have seemingly become more defensive investment options in 2023 in light of a sustained tech rally all through 2023. Names like the ones below can be considered to be safe stocks to buy for beginners in particular, and they most certainly are some of the top low-risk stocks to buy in the market this year. As such, our list below may act as a helpful guide for beginner investors looking for some of the most stable stocks out there today.
13 Safe Stocks To Invest In
Our Methodology
We have selected stocks from sectors like consumer staples, healthcare, and technology since these sectors have proven to be safe historically and in 2023. They are ranked based on the number of hedge funds holding stakes in them, from the lowest to the highest number, by using Insider Monkey's first-quarter hedge fund data.
The Hershey Company (NYSE:HSY) shares were upgraded from Neutral to Outperform by Max Gumport, an analyst at Exane BNP Paribas, on July 19. The analyst also announced a price target of $268 on the stock.
The Hershey Company (NYSE:HSY) is a consumer staples company that engages in the manufacture and sale of confectionery products and pantry items internationally. The company is based in Hershey, Pennsylvania.
There were 44 hedge funds long The Hershey Company (NYSE:HSY) in the first quarter, with a total stake value of $1.9 billion.
Like Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG), The Hershey Company (NYSE:HSY) is an immensely safe stock many hedge funds are piling into this year.
The Coca-Cola Company (NYSE:KO) is a beverage company operating in the consumer staples sector. It sells non-alcoholic beverages under the Coca-Cola, Fanta Orange, and Diet Coke brands, among more. It is based in Atlanta, Georgia.
An Overweight rating was reiterated on shares of The Coca-Cola Company (NYSE:KO) on July 27 by Dara Mohsenian, an analyst at Morgan Stanley. The analyst also maintains a price target of $70 on the stock.
The Coca-Cola Company (NYSE:KO) was spotted in the 13F holdings of 61 hedge funds at the end of the first quarter. Their total stake value in the company was $27.5 billion.
Bailard Inc held the most shares in The Home Depot, Inc. (NYSE:HD) at the end of the first quarter, amounting to 79,348 shares.
Chris Graja, an analyst at Argus Research, maintains a Buy rating on shares of The Home Depot, Inc. (NYSE:HD) as of July 26. Graja also placed a price target of $350 on the shares.
The Home Depot, Inc. (NYSE:HD) is a home improvement retail company based in Atlanta, Georgia. It sells building materials, home improvement products, lawn and garden products, and more.
Our hedge fund data shows 65 hedge funds holding stakes in The Home Depot, Inc. (NYSE:HD) in the first quarter, with a total stake value of 2.1 billion.
Madison Investments made the following comment about The Home Depot, Inc. (NYSE:HD) in its second-quarter 2023 investor letter:
“The Home Depot, Inc. (NYSE:HD) celebrates 30 years of giving back. Team Depot was created in 1993 as a way of organizing associates who were eager to volunteer in their communities. For 30 years, Team Depot associates have worked side by side with non-profits around the United States. Focus areas include spending time with the elderly and activities with at risk youth. Team Depot also improves the homes and lives of veterans and helps communities impacted by natural disasters.
PepsiCo, Inc. (NASDAQ:PEP) was seen in the portfolios of 70 hedge funds at the end of the first quarter. Their total stake value in the company was $4 billion.
PepsiCo, Inc. (NASDAQ:PEP) is another consumer staples company on our list that markets and sells beverages and convenient foods internationally. It is based in Purchase, New York.
John Staszak at Argus Research maintains a Buy rating on shares of PepsiCo, Inc. (NASDAQ:PEP) as of July 14. The analyst also raised his price target on the stock from $193 to $195.
The Procter & Gamble Company (NYSE:PG) is a provider of branded consumer packaged goods in the consumer staples sector. It offers hair care products, personal care products, and more. The company is based in Cincinnati, Ohio.
A total of 75 hedge funds held stakes in The Procter & Gamble Company (NYSE:PG) during the first quarter, with a total stake value of $4.7 billion.
Morgan Stanley analyst Dara Mohsenian reiterated an Overweight rating on shares of The Procter & Gamble Company (NYSE:PG) on July 25, alongside a price target of $174.
Bailard Inc was the most prominent shareholder in The Procter & Gamble Company (NYSE:PG) at the end of the first quarter, holding 151,031 shares in the company.
As of July 20, Robyn Karnauskas, an analyst at Truist Securities, maintains a Buy rating on shares of Merck & Co., Inc. (NYSE:MRK). The analyst also placed a price target of $116 on the stock.
We saw 75 hedge funds long Merck & Co., Inc. (NYSE:MRK) at the end of the first quarter, with a total stake value of $3.7 billion.
Merck & Co., Inc. (NYSE:MRK) is a pharmaceutical company operating internationally. It works through its Pharmaceutical and Animal Health segments. The company is based in Rahway, New Jersey.
Baron Funds said the following about Merck & Co., Inc. (NYSE:MRK) in its second-quarter 2023 investor letter:
“During the second quarter, Merck & Co., Inc. (NYSE:MRK) filed the first lawsuit (followed by the filing of additional lawsuits by other parties) against the federal government challenging the constitutionality of the Medicare Drug Price Negotiation Program (the Program) that Congress established as part of the Inflation Reduction Act. In Merck’s complaint, Merck argues that the Program violates the Fifth Amendment because it allows the federal government to take Merck’s innovative drugs without providing just compensation for them. In addition, Merck argues the Program violates the First Amendment because it forces them to sign an agreement saying the government mandated prices are fair and the result of a negotiation when in fact, Merck argues, prices are not negotiated or fair. These lawsuits will take time to work their way through the legal process and in the meantime, the Program moves ahead on its scheduled path. The consensus view is that these lawsuits will not be successful, and the Program will remain in place. We suspect Merck’s arguments may convince at least a few U.S. Supreme Court Justices when the case reaches the U.S. Supreme Court, but the ultimate outcome is impossible to predict. For now, we assume the Program will remain in place and invest with that framework in mind.”
Bailard Inc was the largest shareholder in Johnson & Johnson (NYSE:JNJ) at the end of the first quarter, holding 133,081 shares in the company.
Johnson & Johnson (NYSE:JNJ) is another healthcare company on our list. It is based in New Brunswick, New Jersey. The company researches, develops, manufactures, and sells various healthcare and pharmaceutical products, including skin health and beauty products.
An Outperform rating was maintained on shares of Johnson & Johnson (NYSE:JNJ) by Jayson Bedford, an analyst at Raymond James, on July 24. The analyst also raised his price target on the stock from $181 to $184.
In total, 86 hedge funds were long Johnson & Johnson (NYSE:JNJ) in the first quarter. Their total stake value in the company was $4.5 billion.
Walmart Inc. (NYSE:WMT) is a retail and wholesale company operating in the consumer staples sector. It manages supercenters, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, and discount stores. The company is based in Bentonville, Arkansas.
Edward Yruma, an analyst at Piper Sandler, upgraded shares of Johnson & Johnson (NYSE:JNJ) from Neutral to Overweight on July 25. The analyst also announced a price target of $210 on the stock.
In the first quarter, 91 hedge funds held stakes in Walmart Inc. (NYSE:WMT), with a total stake value of $5.7 billion.
Like Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG), Walmart Inc. (NYSE:WMT) is a stock that is highly popular among elite hedge funds today.
