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In this article, we discuss the 12 safest stocks to invest in. If you want to see more stocks in this selection, check out 5 Safest Stocks To Invest In.
The stock market outlook for 2023 is rather dismal as per the majority of Wall Street analysts. According to Deutsche Bank, global stocks are forecasted to plummet sharply by mid-2023 as a recession threatens to hit the United States. David Folkerts-Landau, chief economist at Deutsche Bank, wrote in a note:
"We see major stock markets plunging 25% from levels somewhat above today's when the US recession hits, but then recovering fully by year-end 2023, assuming the recession lasts only several quarters."
In the United States, analysts forecast the S&P 500 to rally to 4,500 in the first half of 2023, then a selloff of more than 25% in the third quarter, before recovering back to 4,500 by the end of the year. In an effort to control the 40-year high inflation, the Federal Reserve will continue to raise rates, albeit at a slower pace than 2022, which will eventually tip the economy towards a full blown recession in 2023.
While some money managers are predicting a recession, others believe that the global economy will be hit with stagflation instead, which is a period of high inflation and high unemployment. Whatever may be the fate of the US economy next year, it is important for investors to safeguard their money and construct a safe equity portfolio, consisting of defensive names like Philip Morris International Inc. (NYSE:PM), ConocoPhillips (NYSE:COP), and Target Corporation (NYSE:TGT).
Our Methodology
The following stocks are defensive, enjoy strong market visibility, display solid dividend profiles, and have a prominent history of surviving market downturns. This qualifies the following companies as safe investments in a volatile economic environment. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022.
Photo by Ruben Sukatendel on Unsplash
Safest Stocks To Invest In
12. Anheuser-Busch InBev SA/NV (NYSE:BUD)
Number of Hedge Fund Holders: 14
Anheuser-Busch InBev SA/NV (NYSE:BUD) is a Belgian company engaged in the production, distribution, and commercialization of alcoholic beverages and soft drinks worldwide. It offers a portfolio of approximately 500 beer brands, including Budweiser, Corona, and Stella Artois. For full-year 2022, Anheuser-Busch InBev SA/NV (NYSE:BUD) expects its FY22 EBITDA to grow between 6%-8% and the revenue to trail ahead of EBITDA from a solid combination of volume and price.
On November 28, JPMorgan analyst Jared Dinges upgraded Anheuser-Busch InBev SA/NV (NYSE:BUD) to Overweight from Underweight with a price target of $70, up from $45. The analyst sees "scope for earnings outperformance" and said the company's "rapidly deleveraging balance sheet provides optionality." Anheuser-Busch InBev SA/NV (NYSE:BUD)’s transition to a "higher-quality top-line growth story is well underway," the analyst told investors in a research note. He views AB InBev's valuation as attractive at present levels.
According to Insider Monkey’s data, 14 hedge funds were long Anheuser-Busch InBev SA/NV (NYSE:BUD) at the end of Q3 2022, with collective stakes worth $740.2 million. Ken Fisher’s Fisher Asset Management is the leading position holder in the company, with 9.2 million shares valued at approximately $419 million.
Like Philip Morris International Inc. (NYSE:PM), ConocoPhillips (NYSE:COP), and Target Corporation (NYSE:TGT), Anheuser-Busch InBev SA/NV (NYSE:BUD) is one of the safest stocks to monitor.
Here is what ClearBridge Investments Large Cap Growth Strategy has to say about Anheuser-Busch InBev SA/NV (NYSE:BUD) in its Q4 2021 investor letter:
“To make room for these new names and optimize the growth profile of the Strategy, we exited two additional positions during the quarter. We sold out of Anheuser-Busch InBev as we see too much work ahead for the world’s largest beer maker to re-ignite sales growth post COVID-19. While the company should benefit from a recovery in the on-premise channel, individual country complexities, the hedging of raw materials, and senior management turnover leave us more confident in the Strategy’s other reopening-related holdings.”
11. Unilever PLC (NYSE:UL)
Number of Hedge Fund Holders: 21
Unilever PLC (NYSE:UL) is a London-based fast moving consumer goods company. It operates through Beauty & Personal Care, Foods & Refreshment, and Home Care segments. Unilever PLC (NYSE:UL) is one of the safest stocks to add to a portfolio. On November 16, the company declared a EUR 0.4268 per share quarterly dividend, which is payable on December 9 to shareholders of record on November 18.
On November 1, Morgan Stanley analyst Pinar Ergun raised the price target on Unilever PLC (NYSE:UL) to $46 from $42.75 and kept an Equal Weight rating on the shares.
According to Insider Monkey’s third quarter database, 21 hedge funds were bullish on Unilever PLC (NYSE:UL), with combined stakes worth $708 million. Tom Russo’s Gardner Russo & Gardner held a prominent stake in the company, comprising 6.40 million shares worth approximately $281 million.
Here is what Mayar Capital specifically said about Unilever PLC (NYSE:UL) in its Q2 2022 investor letter:
“In 1895 the Lever brothers created a new brand of hand soap. Inspired by the growing demand for hygiene products, the Lifebuoy brand of soaps was launched to ‘make health infectious’. 128 years later the Lifebuoy brand continues as a leading soap brand – albeit without the coal tar-derived ingredients list. In fact, the market research firm Kantar ranked Lifebuoy as the global #3 most chosen FMCG brand in 2020, just below Coca-Cola (KO) and Colgate (CL) – an astonishing fact given the age of the brand. While the brand is largely absent from shelves here in the UK, it is a juggernaut in Asian markets, and is the #1 brand in India.
There are two observations about the Lifebuoy story which tell us a lot about Unilever PLC (NYSE:UL), which is currently our largest holding in the Fund.
The first is the enduring power of brands in the consumer goods market. According to Kantar’s list of most chosen brands, the top 20 global marques have an average age of 116 years, with over half being founded in the 19th century. Fashions come and go, but there is something special about low-cost consumable goods that advantages strong, time-worn brand names…” (Click here to view full text)
10. Dollar Tree, Inc. (NASDAQ:DLTR)
Number of Hedge Fund Holders: 37
Dollar Tree, Inc. (NASDAQ:DLTR) is an American company that operates a network of discount variety retail stores. It operates in two segments, Dollar Tree and Family Dollar. On November 22, Dollar Tree, Inc. (NASDAQ:DLTR) posted a Q3 GAAP EPS of $1.20 and a revenue of $6.94 billion, outperforming Wall Street estimates by $0.03 and $100 million, respectively. Consolidated net sales for the full year are now expected to range from $28.14 billion to $28.28 billion, compared to the previous outlook of $27.85 billion to $28.10 billion and a consensus of $28.05 billion.
On November 23, Deutsche Bank analyst Krisztina Katai raised the price target on Dollar Tree, Inc. (NASDAQ:DLTR) to $194 from $163 and kept a Buy rating on the shares. The analyst is "encouraged" by Dollar Tree, Inc. (NASDAQ:DLTR)’s sales progress in Q3 2022. Both Dollar Tree banners reported sales upside, with same-store sales improving as the quarter progressed, resulting in the lifted revenue guidance for 2022, the analyst told investors in a research note.
According to Insider Monkey’s third quarter database, 37 hedge funds were bullish on Dollar Tree, Inc. (NASDAQ:DLTR), compared to 38 funds in the earlier quarter. Paul Hilal’s Mantle Ridge LP is the biggest position holder in the company, with 11.3 million shares worth $1.5 billion.
Here is what Madison Funds specifically said about Dollar Tree, Inc. (NASDAQ:DLTR) in its Q2 2022 investor letter:
“Dollar Tree, Inc. (NASDAQ:DLTR) reported strong results on the heels of rolling out the $1.25 price point initiative at all Dollar Tree stores nationwide. Furthermore, they announced several executive leadership changes, undoubtedly catalyzed by new Executive Chairman Richard Dreiling. We remain encouraged by the progress to date and are excited to see what the new team can do at Dollar Tree over the coming years.”
9. Monster Beverage Corporation (NASDAQ:MNST)
Number of Hedge Fund Holders: 39
Monster Beverage Corporation (NASDAQ:MNST) is one of the safest stocks to invest in. The California-based company is engaged in the development, marketing, and distribution of energy drink beverages and concentrates in the United States and internationally. The company operates through three segments – Monster Energy Drinks, Strategic Brands, and Other. Monster Beverage Corporation (NASDAQ:MNST) announced on November 3 that its board of directors have authorized a new share repurchase program of an additional $500 million of the outstanding common stock.
On November 29, Argus analyst John Staszak raised the price target on Monster Beverage Corporation (NASDAQ:MNST) to $118 from $113 and kept a Buy rating on the shares. The analyst contended that shares remain attractive despite investor concerns about rising input costs and freight rates. He raised his FY22 EPS view by 4c to $2.56 and his FY23 view by 1c to $3.16, both of which are ahead of consensus.
According to Insider Monkey’s third quarter data, 39 hedge funds were bullish on Monster Beverage Corporation (NASDAQ:MNST), compared to 46 funds in the last quarter. Neal C. Bradsher’s Broadwood Capital is the leading stakeholder of the company, with 4.65 million shares worth $405 million.
Here is what Carillon Tower Advisers specifically said about Monster Beverage Corporation (NASDAQ:MNST) in its Q2 2022 investor letter:
“Monster Beverage Corporation (NASDAQ:MNST) develops and sells energy drinks and concentrates. The company’s shares outperformed, driven by an impressive earnings report highlighted by better than expected organic growth. Management also gave guidance that indicated a potential bottom in gross margins, as well as upcoming price increases that helped give investors confidence in its growth outlook.”
8. Church & Dwight Co., Inc. (NYSE:CHD)
Number of Hedge Fund Holders: 40
Church & Dwight Co., Inc. (NYSE:CHD) is a New Jersey-based company that develops, manufactures, and markets household, personal care, and specialty products. It operates through three segments – Consumer Domestic, Consumer International, and Specialty Products Division. Church & Dwight (NYSE:CHD) paid a $0.2625 per share quarterly dividend on December 1. It is one of the safest stocks to monitor.
On November 7, Argus analyst Kristina Ruggeri upgraded Church & Dwight Co., Inc. (NYSE:CHD) to Buy from Hold with a $78 price target. The analyst is optimistic that the company has made progress in resolving its supply chain and production constraints and expects its fill rates to normalize by the end of the year. Church & Dwight Co., Inc. (NYSE:CHD) has also seen market share gains for its lower-priced "value" products as consumers trade down from more expensive products in an inflationary environment.
Among the hedge funds tracked by Insider Monkey, 40 funds reported owning stakes worth $1.28 billion in Church & Dwight Co., Inc. (NYSE:CHD) at the end of Q3 2022, compared to 32 funds in the prior quarter worth $1.33 billion. Terry Smith’s Fundsmith LLP is the largest stakeholder of the company, with 8.45 million shares valued at $604.2 million.
Here is what LRT Capital Management has to say about Church & Dwight Co., Inc. (NYSE:CHD) in its Q1 2021 investor letter:
“Church & Dwight is another classic “defensive” company – it sells cleaning products (Arm & Hammer, OxiClean), toothache medication (Orajel), and condoms (Trojans). For those that fail to purchase Trojans, the company also offers pregnancy test kits (First Response). Joking aside, the company’s revenue has historically grown by GDP+ rates organically. Combined with thoughtful acquisitions, 10-year revenue growth has averaged +6.6%, which has translated to EPS growth of over +11% per year. The company has accomplished all this with ? of the overall volatility of the stock market. The company reported Q4 2020 earnings on January 29th, beating both top (revenue +14% YoY) and bottom line measures (EPS $0.59 vs $0.51 expected). We view the shares as reasonably valued at 26x forward earnings given the high level of predictability of the company’s earnings and low financial leverage. Shares are down 0.5% year-to-date.”
7. Constellation Brands, Inc. (NYSE:STZ)
Number of Hedge Fund Holders: 43
Constellation Brands, Inc. (NYSE:STZ) is a New York-based company that produces, imports, markets, and sells beer, wine, and spirits in the United States, Canada, Mexico, New Zealand, and Italy. Constellation Brands, Inc. (NYSE:STZ) is one of the safest stocks to consider buying.
Argus analyst John Staszak on November 28 raised the price target on Constellation Brands, Inc. (NYSE:STZ) to $295 from $270 and maintained a Buy rating on the shares. The analyst expects Constellation Brands, Inc. (NYSE:STZ) to emerge from the pandemic in a position of strength as beer shipments remain strong and the company overcomes headwinds created by the sale of certain products to Gallo, the analyst wrote in a research note.
Among the hedge funds tracked by Insider Monkey, Constellation Brands, Inc. (NYSE:STZ) was part of 43 public stock portfolios at the end of September 2022, compared to 44 in the earlier quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the largest stakeholder of the company, with 1.3 million shares worth $313.5 million.
6. Valero Energy Corporation (NYSE:VLO)
Number of Hedge Fund Holders: 47
Valero Energy Corporation (NYSE:VLO) is a Texas-based company that manufactures, markets, and sells transportation fuels and petrochemical products in the United States, Canada, the United Kingdom, Ireland, and internationally. The company operates through three segments – Refining, Renewable Diesel, and Ethanol. On October 26, Valero Energy Corporation (NYSE:VLO) declared a quarterly dividend of $0.98 per share, in line with previous. The dividend is distributable on December 8, to shareholders of record on November 17.
On November 9, Piper Sandler analyst Ryan Todd raised the price target on Valero Energy Corporation (NYSE:VLO) to $177 from $147 and kept an Overweight rating on the shares. Despite investor concerns of a "one off" uplift to refining margins in 2022, recent earnings results from the independent refiners and "persistent systemic tightness have made it abundantly clear that global tightness in refined product markets is likely to persist for quite some time," the analyst told investors. He raised his 2023 outlook for refining margins to within 10% of 2022 levels.
According to Insider Monkey’s Q3 data, 47 hedge funds were long Valero Energy Corporation (NYSE:VLO), compared to 43 funds in the last quarter. Israel Englander’s Millennium Management is a prominent stakeholder of the company, with 1.8 million shares worth $194.2 million.
In addition to Philip Morris International Inc. (NYSE:PM), ConocoPhillips (NYSE:COP), and Target Corporation (NYSE:TGT), Valero Energy Corporation (NYSE:VLO) is one of the safest stocks favored by elite investors.
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Disclosure: None. 12 Safest Stocks To Invest In is originally published on Insider Monkey.
