In this article, we discuss the 12 safe stocks to buy for beginner investors.
Economic forecasts can be incredibly fickle, and although the past few years have proven that already, it seems that this will remain true for the year 2022 as well. With the S&P 500 beginning the year with the worst January since 2009 and international conflict causing broader markets to tumble and commodity stocks to soar, it seems another fire was lit under the already searing level of inflation. To combat this, the Federal Reserve attempted to hike up interest rates, putting further pressure on an already strained economy. Although several economists lowered their Gross Domestic Product (GDP) forecasts in light of these macro factors, things may not be as bleak as they seem. A report by Kiplinger states that inflation likely peaked in March, and should begin to ease off soon, although the year would still end with a high 5.5%.
In this environment, aspiring investors can find themselves stranded in uncertain waters. Admittedly, choosing the right stocks for an investment portfolio can be time-consuming, even for some veteran investors. Of course, every investor hopes to maximize their profits, and while we all love the idea of “risk-free” stocks, the reality is that there is no such thing. Even the best and most stable companies can face unexpected trouble, and unless you are a gifted stock picker, some of your investments will experience significant market volatility. With that said, there is still plenty of opportunity in the market if you know where to put your money. Some stocks are significantly safer than others, and if a company is in decent financial shape, chances are that it is a relatively safe investment, especially for beginners that are still navigating the world of investments and finance.
Thus, it would be useful to know which stocks currently present the safest investment choices for beginner investors. Some of these stocks include The Procter & Gamble Company (NYSE:PG), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL), among others.
Photo by Nick Chong on Unsplash
Our Methodology
In order to pick the 12 best safe stocks to buy for beginner investors, we did a careful assessment of several high-quality blue-chip stocks that are considered safe investments in the current market scenario. We also took into account company financials, most recent quarterly results, and the analyst and sentiment around these stocks.
The hedge fund sentiment around each stock was derived from Insider Monkey’s database which tracks 924 hedge funds as of the fourth quarter of 2021.
Safe Stocks To Buy For Beginner Investors
12. Starbucks Corporation (NASDAQ:SBUX)
Number of Hedge Fund Holders: 53
Based in Seattle, Washington, Starbucks Corporation (NASDAQ:SBUX) is an American multinational chain of coffeehouses and roastery reserves that operates in over 80 different countries and is recognized for its roasted whole beans and ground coffees, ready-to-drink beverages, and multiple food products.
Starbucks Corporation (NASDAQ:SBUX) is a leader among the beverage stocks on Wall Street. Among the hedge funds being tracked by Insider Monkey, London-based investment firm Fundsmith LLP is a leading shareholder in Starbucks Corporation (NASDAQ:SBUX), with 11.5 million shares worth more than $1.3 billion.
TIG analyst Peter Saleh lowered the price target on Starbucks Corporation (NASDAQ:SBUX) to $110 from $130 but reiterated a Buy rating on the shares, stating that the risk to traffic is “nominal”.
In addition to The Procter & Gamble Company (NYSE:PG), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL); Starbucks Corporation (NASDAQ:SBUX) is one of the safest stocks to buy for beginner investors.
In its Q4 2021 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and Starbucks Corporation (NASDAQ:SBUX) was one of them. Here is what the fund said:
“We trimmed Starbucks Corporation (NASDAQ:SBUX) as a source of funding and to edge our weighting down. While the company has managed well through a difficult environment, we recognize that lockdowns are categorically challenging for this business. Starbucks Corporation (NASDAQ:SBUX) has a robust mobile order and pay platform fueled by a sophisticated app as well as a strong loyalty program, but this doesn’t alter the fact that the store-based retail business is important to Starbucks Corporation (NASDAQ:SBUX). As a result, we felt a smaller weighting was appropriate.”
11. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 57
Founded in San Bernadino, California, McDonald’s Corporation (NYSE:MCD) is one of the largest multinational fast-food corporations in the world. With a fortress balance sheet that provides it a healthy cushion to weather an economic slowdown, the company has consistently grown its dividend distributions for 45 years in a row.
At the end of the fourth quarter of 2021, 57 hedge funds in the database of Insider Monkey held stakes worth $2.2 billion in McDonald’s Corporation (NYSE:MCD), compared to 58 funds in the preceding quarter, with holdings worth $3.3 billion. Renaissance Technologies is the biggest shareholder of the company, with 1.75 million shares worth $470.4 million.
On April 12, Citi analyst Jon Tower assumed coverage of McDonald’s Corporation (NYSE:MCD) with a Neutral rating and price target of $270, up from $260. The analyst does not believe consensus estimates fully reflect the impact of the company’s Russia store closures, Ukraine disruptions, and inflationary pressures to consumer demand in the rest of Europe.
10. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 57
Costco Wholesale Corporation (NASDAQ:COST) is an American multinational corporation that operates a chain of membership-only big-box retail stores. Earlier this March, Costco Wholesale Corporation (NASDAQ:COST) produced its earnings report which detailed the company’s earnings for the fiscal second quarter of 2022. The company reportedly generated revenues of $51.90 billion for the quarter, up 15.94% on a year-over-year basis, and surpassed revenue estimates by $395.81 million. The company reported earnings per share of $2.92, crossing EPS estimates by $0.18.
On April 14, Tigress Financial analyst Ivan Feinseth raised his price target on Costco Wholesale Corporation (NASDAQ:COST) to $678 from $520 and maintained a Buy rating on the shares, stating that the company is experiencing strong consumer demand and membership growth, which caused its shares to soar.
According to Insider Monkey’s database, Costco Wholesale Corporation (NASDAQ:COST) was spotted on 57 investment portfolios by the end of the fourth quarter of 2021. The total stakes of these funds in the company amounted to approximately $5.40 billion, up from $4.39 billion in the previous quarter with 55 positions. As of December 21, Fisher Asset Management is the largest stakeholder in Costco Wholesale Corporation (NASDAQ:COST), with stakes valued at $2.31 billion.
ClearBridge Investments, an investment management firm, mentioned Costco Wholesale Corporation (NASDAQ:COST) in its fourth-quarter 2021 investor letter. Here is what the firm said:
“Portfolio gains were led by a diverse group of contributors. Also in consumer discretionary, Costco, which operates a chain of membership-only big-box retail stores, continues to impress as it takes to share and becomes more relevant for the consumer even as the world opens up.”
9. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 60
PepsiCo, Inc. (NASDAQ:PEP) is an American multinational food, snack, and beverage corporation headquartered in Harrison, New York. Encompassing all aspects of the food and beverage market, it oversees the manufacturing, distribution, and marketing of its products. A dividend king that boasts profitable quarters, PepsiCo, Inc. (NASDAQ:PEP) has increased its dividend for over 50 consecutive years.
On April 12, Deutsche Bank analyst Steve Powers raised the price target on PepsiCo, Inc. (NASDAQ:PEP) to $173 from $171 and keeps a Hold rating on the shares ahead of the company’s Q1 results on April 26.
By the end of the fourth quarter of 2021, 60 hedge funds held stakes in the company worth around $4.64 billion. This is compared to 61 funds in the third quarter of 2021, with stakes worth $4.43 billion. The company has been an investor’s favorite for quite some time now, with Fundsmith LLP being the largest shareholder in PepsiCo, Inc. (NASDAQ:PEP) owning over 10.4 million shares of the stock, valued at roughly $1.80 billion.
Here is what ClearBridge Investments had to say about PepsiCo, Inc. (NYSE:PEP) in its fourth-quarter 2021 investor letter:
“The pandemic created opportunities for us to be more aggressive in a variety of areas of the market. We were opportunistic throughout the year. After a strong year for equities, we sought to bolster more defensive areas of the portfolio and added to PepsiCo, increasing our exposure to a high-quality and stable name.”
8. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 63
Walmart Inc. (NYSE:WMT) is an American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores. Operating approximately 4,700 stores in the United States and more than 10,500 retail stores around the world, the Arkansas-based supermarket giant is well on its way to becoming a dividend king, having achieved 49 years of consistent dividend increases.
On February 17, Walmart Inc. (NYSE:WMT) registered an earnings per share of $1.53 for the quarter, beating estimates by $0.03. Additionally, the company’s revenues came to $151.53 billion and outperformed the market forecast by $1.49 billion. Furthermore, the stock has gained 13.20% over the past year.
Earlier on April 13, Morgan Stanley analyst Simeon Gutman maintained an Overweight rating and $167 price target on Walmart Inc. (NYSE:WMT) shares. The analyst believes it is encouraging that Walmart Inc. (NYSE:WMT) is hiring an outsider as CFO in a departure from recent history, claiming that it is “a high-quality hire”.
As of Q4 2021, 63 hedge funds were long Walmart Inc. (NYSE:WMT) with collective stakes of $7.13 billion in the retail giant. Of these, Rajiv Jain’s GQG Partners was the leading hedge fund having stakes of more than $1.50 billion in Walmart Inc. (NYSE:WMT) by the end of the year.
7. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 66
Bristol-Myers Squibb Company (NYSE:BMY) is a New York-based manufacturer that sells biopharmaceutical products worldwide that focuses on pharmaceutical drugs for multiple therapeutic focus areas such as hematology, oncology, cardiovascular, immunology, fibrotic, and neuroscience, among others.
A decent pick for any starter portfolio, Bristol-Myers Squibb Company (NYSE:BMY) has been consistently increasing its dividend yields for 16 consecutive years, and has a yield of 2.85% as of December 31.
On March 30, BMO Capital analyst Evan Seigerman raised his price target on Bristol-Myers Squibb Company (NYSE:BMY) to $81 from $74 and keeps an Outperform rating on the shares. The analyst adds that the company’s shares are undervalued given its strong fundamentals, and he also believes that its margin leverage is underestimated.
For the fiscal fourth quarter of 2021, Bristol-Myers Squibb Company (NYSE:BMY) produced its earnings report, with revenues valued at $11.99 billion, up 8.29% on a year-over-year basis. The company also reported an EPS of $1.83, beating expert estimates by $0.03.
Among the hedge funds tracked by Insider Monkey, 66 funds were bullish on Bristol-Myers Squibb Company (NYSE:BMY) at the end of Q4 2021, with total stakes amounting to $3.3 billion. John Overdeck and David Siegel’s Two Sigma Advisors is the biggest stakeholder in the company, with 6.6 million shares worth $412.5 million.
Wedgewood Partners mentioned Bristol-Myers Squibb Company (NYSE:BMY) in its Q4 2020 investor letter. Here is what the fund had to say:
“Bristol-Myers Squibb recently reported accelerating sales as much of the medical services industry returned to work. The Company continues to expect double-digit earnings growth over the next few years, driven by existing drugs, in addition to a broad pipeline of new drugs and indications. While the market remains fixated on a couple of patent expirations that could occur over the next several years, we think this is well-known at this point, yet the market still undervalues a couple of key acquisitions the Company has made in the past few years, particularly Celgene, which was acquired for a song.”
6. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 67
The Procter & Gamble Company (NYSE:PG) is one of the largest multinational consumer goods corporations in the world. An industry leader in marketing branded consumer packaged goods, The Procter & Gamble Company (NYSE:PG) declared an increased quarterly cash dividend of $0.9133 per share. Furthermore, the company is aiming to return over $18 billion to investors by the end of the fiscal year 2022.
On April 22, Barclays analyst Lauren Lieberman raised her price target on The Procter & Gamble Company (NYSE:PG) to $176 from $167 and kept an Overweight rating on the shares. The analyst expects the company’s results to “set an extremely high bar” for the industry and will ultimately serve to reinforce the company’s “widened fundamental performance gap.”
The company posted an EPS of $1.33 by the end of the third quarter of 2022, which beat analysts’ estimates by $0.04. Revenue for the quarter was recorded at $19.38 billion, an increase of 7.02% compared to the year-ago quarter, surpassing market estimates by $687 million.
The Procter & Gamble Company (NYSE:PG) is a popular stock pick among elite hedge funds, and by the end of Q4 2021, 67 hedge funds held long positions in the company worth roughly $6.61 billion, compared to 69 hedge funds in the previous quarter with stakes worth $6.41 billion. GQG Partners is the most prominent investor in The Procter & Gamble Company (NYSE:PG) with stakes worth approximately $1.23 billion in the company.
Similar to The Coca-Cola Company (NYSE:KO), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL); The Procter & Gamble Company (NYSE:PG) is a notable stock that has minimal risk factors, making it suitable for beginner investors.
5. The Coca-Cola Company (NYSE:KO)
Number Of Hedge Fund Holders: 70
Another dividend king on our list, The Coca-Cola Company (NYSE:KO) is a global beverage giant that has interests in the manufacturing, retailing, and marketing of non-alcoholic beverage concentrates and syrups, and alcoholic beverages. With over 60 years of consecutive dividend growth, the company declared a quarterly dividend of $0.44 per share on February 17, a 4.8% increase from its prior dividend of $0.42.
For the fiscal first quarter of 2022, The Coca-Cola Company (NYSE:KO) announced that its quarterly revenues came in at $10.50 billion, up 16.44% on a year-over-year basis, and outperformed the market by more than $670.79 million. The company also reported an EPS of $0.64, beating expert estimates by $0.06.
A top dividend stock among investors and one of the best for beginner investors, around 70 hedge funds were long The Coca-Cola Company (NYSE:KO) at the end of Q4 2021. The total stakes of these funds were estimated to be $28.61 billion, up from $25.13 billion in the third quarter of 2021 with 61 positions. Among these hedge funds being tracked by Insider Monkey, Warren Buffett’s Berkshire Hathaway is a leading shareholder of the company, owning 400 million shares worth $23.6 billion.
ClearBridge Investments mentioned The Coca-Cola Company (NYSE:KO) in its “Dividend Strategy” fourth-quarter 2021 investor letter. Here is what the firm said:
“Over the last year, we have repositioned our portfolio to navigate the course we see ahead. We added to more defensive areas of the portfolio like consumer staples (Coca-Cola). While the next month or two will likely prove choppy on account of the Omicron variant, we believe that Omicron, like Delta, represents a speed bump on the way to recovery rather than a true change in course. We see strong economic momentum continuing in 2022 and we expect interest rates to rise. After a decade of remarkably low rates, we would not be surprised if this change in direction is accompanied by some fits and starts in the markets. With our emphasis on pricing power, purposeful sector exposure, valuation discipline, and a strong dividend profile, we believe we are well-positioned for the year ahead.”
4. Johnson & Johnson (NYSE:JNJ)
Number Of Hedge Fund Holders: 83
Johnson & Johnson (NYSE:JNJ) is a global healthcare company that investigates, develops, produces, and distributes a variety of medical devices, pharmaceuticals, and consumer packaged goods. The company recently announced a 6.6% increase in the quarterly dividend, from $1.06 per share to $1.13 per share.
Johnson & Johnson (NYSE:JNJ) released its earnings report for the fiscal first quarter of 2022 on April 19, with a reported EPS at $2.67, surpassing market estimates by $0.10. Additionally, the company reported a revenue of $23.43 billion.
Earlier on April 20, Credit Suisse analyst Matt Miksic raised his price target on Johnson & Johnson (NYSE:JNJ) to $205 from $200 and kept an Outperform rating on the shares of the company. The analyst notes that Johnson & Johnson’s (NYSE:JNJ) Q1 results led off Med Supplies and Devices earnings with better-than-expected growth across nearly every one of its MedTech businesses.
Johnson & Johnson (NYSE:JNJ) is one of the top safe stocks that beginner investors could add to their portfolios. At the end of the fourth quarter of 2021, 83 hedge funds in the database of Insider Monkey held stakes worth $7.3 billion in Johnson & Johnson (NYSE:JNJ), compared to 88 in the previous quarter worth $6.8 billion. Of these 83 funds, Fundsmith LLP held 7.21 million shares worth $1.23 billion in Johnson & Johnson (NYSE: JNJ), making it the largest shareholder of the firm.
3. General Motors Company (NYSE:GM)
Number Of Hedge Fund Holders: 90
General Motors Company (NYSE:GM) is one of the largest multinational automotive manufacturing corporations in the world. Shares of the company turned green in the after-hours trading session on April 26 following its optimistic profit for the first quarter. The Michigan-based automaker reported an EPS of $2.09 on an adjusted basis, crushing expectations of $1.68 per share.
On April 27, Citi analyst Itay Michaeli raised the price target on General Motors Company (NYSE:GM) to $98 from $95 and maintained a Buy rating on the shares. According to the analyst, General Motors Company (NYSE:GM) delivered a strong Q1, a “confidently confirmed” 2022 outlook and “encouraging” electric vehicle updates.
General Motors Company (NYSE:GM) is a favorite among elite hedge funds, making it a safe choice for anyone starting their investment journey. Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Harris Associates is one of the biggest shareholders in General Motors Company (NYSE:GM) with 33 million shares worth more than $1.9 billion. Overall, 90 hedge funds were bullish on the stock by the end of December 2021.
Here is what Oakmark Global Fund has to say about General Motors Company (NYSE:GM) in its Q1 2022 investor letter:
“General Motors (NYSE:GM) was a detractor during the quarter, due to increased macro uncertainty, higher fuel prices, and concerns over rising input costs, which pressured the company in particular and the auto industry as a whole. While we are closely monitoring the potential impact of these dynamics, industry demand remains robust, driven by strong consumer balance sheets and pent-up demand after multiple years of constrained production. We also remain confident in GM’s ability to navigate a complex operating environment, which the company has consistently demonstrated over the past few years. Finally, the long-term picture remains bright. We believe GM is significantly undervalued, is well-positioned for the long-term transition to electric vehicles and has numerous needle-moving ancillary business opportunities (most notably Cruise, which is an industry leader in autonomous vehicle technology) that are underappreciated.”
2. Apple Inc. (NASDAQ:AAPL)
Number Of Hedge Fund Holders: 134
A multinational technology company that specializes in consumer electronics, software, and online services, Apple Inc. (NASDAQ:AAPL) is a pandemic winner as demand for its iPhones, MacBooks, and services surged, while the popularity of its iPhone 13 series helped grow its market share last year.
Earlier on January 27, Apple Inc. (NASDAQ:AAPL) released its earnings report for the fiscal first quarter of 2022 in which it reported earnings per share of $2.10, beating market estimates by $0.21. The tech giant also generated quarterly revenues that amounted to $123.95 billion, an increase of 11.22% on a year-over-year basis, surpassing the market consensus by $5.41 billion.
Canaccord analyst T. Michael Walkley reiterated his Buy rating and $200 price target on Apple Inc. (NASDAQ:AAPL) shares. The analyst expects the company to report solid Q2 results with potential upside driven by strong iPhone 13 and Mac sales, making the share price more compelling for longer-term investors.
One of the most notable stock picks among long-term and beginner investors, Apple Inc. (NASDAQ:AAPL) was found in the public stock portfolios of around 134 hedge funds, compared to 120 funds in the previous quarter. Of these, Warren Buffett’s Berkshire Hathaway held the largest stake in the company, with a position worth $157.5 billion.
ClearBridge Investments, an investment management firm, mentioned Apple Inc. (NASDAQ:AAPL) in its fourth-quarter 2021 investor letter. Here is what the firm said:
“Despite these mixed emerging growth results, the ClearBridge Global Growth Strategy outperformed the benchmark due to resilience among our secular and structural growth holdings. The bulk of these contributions came from U.S. mega-cap growth stocks Apple and Microsoft which continued to uniquely act both offensively and defensively as they have through most of the pandemic.”
1. Microsoft Corporation (NASDAQ:MSFT)
Number Of Hedge Fund Holders: 262
Multinational software company Microsoft Corporation (NASDAQ:MSFT) leads our list of safe stocks beginner investors should pay attention to.
Microsoft Corporation (NASDAQ:MSFT) is up 5.90% after the Washington-based tech giant reported better-than-expected results for Q3 2022 and provided strong guidance for the rest of the year. The software company reported revenue and adjusted earnings per share of $49.36 billion and $2.22, respectively, while surpassing market estimates of $49.05 billion and $2.19.
The investor sentiment for the stock has largely been positive, making Microsoft Corporation (NASDAQ:MSFT) a notable choice for both veteran and aspiring investors. According to Insider Monkey’s database, 262 funds owned stakes in Microsoft Corporation (NASDAQ:MSFT) at the end of the fourth quarter of 2021, amounting to $75.66 billion. This is compared to 250 funds in the preceding quarter that held stakes worth $65.87 billion.
Citi analyst Tyler Radke raised the price target on Microsoft Corporation (NASDAQ:MSFT) to $364 from $355 and kept a Buy rating on the shares of the company. According to the analyst, Microsoft Corporation (NASDAQ:MSFT) delivered a resounding Q3 with a clean beat across key revenue categories, margins and provided a reassuring outlook to investors.
Motiwala Capital mentioned Microsoft Corporation (NASDAQ:MSFT) in its fourth-quarter 2021 investor letter, here is what the firm had to say:
“Microsoft (NASDAQ:MSFT) re-enters our portfolio after a long gap. MSFT sells enterprise and consumer software products as well as hardware products such as the Xbox video game console and Surface laptops. All business segments experienced double-digit revenue growth and earnings per share have compounded in the mid-double digits over the last 5 years. We believe MSFT continues this momentum in the years ahead.”
You can also take a look at 15 Best Technology Stocks To Buy Now and Top 10 Undervalued Tech Stocks.
Follow Insider Monkey on Twitter
Suggested articles:
- 10 Best Defensive Stocks to Buy Today According to Billionaire Ken Fisher
- 10 Consumer Staples Stocks To Buy According To Billionaire Ray Dalio
- 10 Best Retail Stocks To Buy Now
Disclosure. None. 12 Safe Stocks To Buy For Beginner Investors is originally published on Insider Monkey.
