10 Best Long Term Low Risk Stocks to Buy According to Hedge Funds

In this article, we will take a look at the 10 Best Long Term Low Risk Stocks to Buy According to Hedge Funds.

In its report on low-risk investments, TD Asset Management said low-volatility investing can help reduce downside risk while still delivering solid long-term returns. The report said avoiding big losses may matter more than chasing risky gains.

According to TDAM, low-volatility strategies have historically captured much of the market’s upside while limiting losses during weaker periods. The report also revealed that recovering from steep declines is not easy. A portfolio that falls 50% needs a 100% gain just to break even again. TDAM pointed to the sharp swings in 2018 as a reminder that volatility can return quickly after long periods of calm. The firm said many investors underestimate risk during bull markets and react emotionally when markets turn lower.

Another takeaway was that low-volatility portfolios often hold defensive sectors and higher-quality companies with stable earnings and cash flows. These stocks may lag during speculative rallies, but they often perform better during corrections. TDAM also argued that smaller drawdowns can lead to stronger risk-adjusted returns over a full market cycle. The report added that investors often judge low-risk strategies over short periods, especially when aggressive growth stocks are leading the market.

The firm said performance should be evaluated across full market cycles to better understand the benefits of lower-risk investing.

Given this, we will take a look at some of the best long-term stocks to invest in.

Stock market data. Photo by Alesia Kozik on Pexels

Our Methodology:

For this list, we screened for stocks with a 5-year return of over 30%, which shows their long-term appeal. From that list, we picked companies with a beta of less than 1.0 over the past years, using monthly price data. Beta lower than 1.0 shows that these stocks are less volatile than the overall market. We finally picked companies that were most popular among hedge funds, deriving data from Insider Monkey’s Q4 2025 database.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).

10. Arthur J. Gallagher & Co. (NYSE:AJG)

Number of Hedge Fund Holders: 50

5-Year Return: 42.9%

Beta Value: 0.55

On May 7, Citigroup upgraded Arthur J. Gallagher & Co. (NYSE:AJG) to Buy from Neutral and set a $250 price target, down from $280. The firm raised ratings on four insurance broker names, pointing to valuation as the key reason. The analyst said cyclical growth pressures are expected to ease over the next few quarters, creating a “systemic return opportunity in the sector.”

During the Q1 2026 earnings call, Chairman and CEO J. Patrick Gallagher Jr. said the company’s combined Brokerage and Risk Management segments delivered 28% revenue growth in the first quarter. He noted that organic growth reached 5%, while acquisitions added 23%, helped largely by strong results from AssuredPartners.Gallagher said Brokerage revenues rose 30%, with 5% tied to organic growth. He also shared that Gallagher Bassett posted 14% revenue growth, including 10% organic growth.

According to Gallagher, the combined Brokerage and Risk Management segments recorded 12% growth in net earnings and 18% growth in adjusted EBITDAC. He pointed out that the company has now delivered 24 consecutive quarters of double-digit adjusted EBITDAC growth. He said the results reinforced management’s confidence in the strength and resilience of the business. They also supported the company’s full-year 2026 organic growth outlook of 6%.

Gallagher added that the company completed nine tuck-in mergers during the first quarter, representing about $60 million in estimated annualized revenue. He also noted that more than 40 term sheets had either been signed or were being prepared, representing nearly $400 million in annualized revenue.

Arthur J. Gallagher & Co. (NYSE:AJG) is a global insurance brokerage, risk management, and consulting services company. Its operations are organized across brokerage, risk management, and corporate segments.

9. Devon Energy Corporation (NYSE:DVN)

Number of Hedge Fund Holders: 50

5-Year Return: 95.9%

Beta Value: 0.48

On May 8, Jefferies upgraded Devon Energy Corporation (NYSE:DVN) to Buy from Hold. It raised its price target on the stock to $62 from $53. The firm said pullbacks in the front end of the oil curve were creating opportunities for investors. The analyst also noted that Devon has several catalysts that could support both absolute and relative outperformance after the close of the Coterra merger. The research note added that attracting long-only capital may require a sharper focus on durable core assets. Jefferies also said selling non-core assets, especially the Marcellus position, could help eliminate debt and improve returns.

On May 15, Evercore ISI analyst Chris Baker resumed coverage of Devon Energy with an In Line rating and a $54 price target. The analyst said the company “stands out” because it offers one of the highest free cash flow yields in the S&P 500 and presents “a compelling valuation narrative relative to large-cap E&P peers.” At the same time, the analyst noted that geopolitical risks could make the timing of new investments more challenging.

Devon Energy Corporation (NYSE:DVN) is a U.S.-based oil and gas producer with a diversified multi-basin portfolio led by its acreage position in the Delaware Basin. The company focuses on the exploration, development, and production of oil, natural gas, and natural gas liquids (NGLs).

8. Altria Group, Inc. (NYSE:MO)

Number of Hedge Fund Holders: 59

5-Year Return: 47.44%

Beta Value: 0.52

On May 15, Barclays raised its price recommendation on Altria Group, Inc. (NYSE:MO) to $64 from $63. It reiterated an Underweight rating on the stock. The firm said the latest FDA guidance could lead to more innovation across the tobacco sector. Barclays believes that could accelerate growth in next-generation products and potentially drive a re-rating of tobacco stocks.

During the Q1 2026 earnings call, CEO William Gifford described the quarter as a strong start to the year. He said adjusted diluted EPS increased 7.3% and noted that Altria’s highly cash-generative businesses continued supporting significant shareholder returns through dividends and share repurchases.

Speaking about oral nicotine pouches, Gifford pointed to continued category growth and the wider rollout of on! PLUS. He said reported shipment volume for the overall on! portfolio climbed nearly 18% to more than 46 million cans. He also noted that on! and on! PLUS together represented 7.8% of the total oral tobacco category. That figure was down 0.8 percentage points from the prior year but improved 0.2 percentage points sequentially.

Gifford added that on! PLUS started shipping nationwide in March and, by the end of the quarter, was available in roughly 100,000 stores. According to him, that represented 85% of the nicotine pouch category volume.

Altria Group, Inc. (NYSE:MO) operates a portfolio of tobacco products for U.S. tobacco consumers aged 21 and older. Its business is organized into smokeable products and oral tobacco products. The smokeable products segment includes combustible cigarettes and machine-made large cigars.

7. American Electric Power Company, Inc. (NASDAQ:AEP)

Number of Hedge Fund Holders: 60

5-Year Return: 47.3%

Beta Value: 0.55

On May 15, TD Cowen analyst Shelby Tucker raised the firm’s price recommendation on American Electric Power Company, Inc. (NASDAQ:AEP) to $148 from $141.  It reiterated a Buy rating on the shares. The firm updated its utility sector models following first-quarter earnings reports. The analyst said utilities are increasingly expected to deliver incremental growth in a cost-neutral way. TD Cowen also expects companies in the sector to accelerate increases to their capital plans, though the firm cautioned that over-promising remains a concern.

On May 7, Scotiabank raised its price goal on AEP to $140 from $131. It kept a Sector Perform rating on the stock. The firm said it was impressed by the company’s “robust” EPS growth outlook, which once again moved higher to a “greater than 9% CAGR” following the announcement of additional capital projects. Scotiabank also noted that after strong outperformance over the past 1-, 3-, 6-, and 12-month periods, the shares are now trading at more than a 10% P/E premium compared to peers. According to the firm, that valuation level has not been seen in at least the past decade, if ever.

American Electric Power Company, Inc. (NASDAQ:AEP) is an electric public utility holding company. Its operating utilities provide generation, transmission, and distribution services to more than five million retail customers across Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia, and West Virginia.

6. General Dynamics Corporation (NYSE:GD)

Number of Hedge Fund Holders: 66

5-Year Return: 80.7%

Beta Value: 0.34

On May 18, Citigroup lowered its price recommendation on General Dynamics Corporation (NYSE:GD) to $364 from $380. It reiterated a Neutral rating on the shares. The firm updated its models across the aerospace and defense sector and said it does not expect an “immediate V-shaped rally” unless there is a resolution to the conflict in the Middle East. At the same time, Citi said the recent selloffs have created buying opportunities. The firm expects aerospace stocks to recover first, followed by defense companies.

During the Q1 2026 earnings call, President Danny Deep said the company reported earnings of $4.10 per diluted share on revenue of $13.5 billion. Senior Vice President and CFO Kimberly Kuryea stated that the company secured more than $26 billion in orders during the quarter. That resulted in an overall book-to-bill ratio of 2:1 and pushed total backlog to $131 billion.

Deep said the Aerospace segment delivered a strong performance during the quarter. He noted that the company delivered 38 aircraft, which was fully in line with expectations. He also said the aircraft generated very strong gross margins and performed better than the G650 models they replaced.

Speaking about Marine Systems, Deep said quarterly growth of 21% was mainly driven by the Columbia-class and Virginia-class submarine programs. He also noted that GDIT continued seeing strong demand for its AI and cybersecurity capabilities. Deep added that the company updated its 2026 guidance and now expects EPS to range between $16.45 and $16.55.

General Dynamics Corporation (NYSE:GD) is a global aerospace and defense company. It provides products and services across business aviation, ship construction and repair, land combat vehicles, weapons systems and munitions, as well as technology products and services.

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