11 Safe Stocks To Buy According To Hedge Funds

Published November 1, 2022 at 2:42 pm EDT Updated September 7, 2026 at 11:43 am EDT

In this article, we take a look at 11 safe stocks to buy according to hedge funds.

Recent selloffs have devastated several equities, and investors are still divided on whether the market has reached oversold territory. Some predict a recession and blame it on the Federal Reserve’s (Fed) upcoming interest rate increases, while others blame the gigantic valuations of major tech companies. Whatever it may be, the stock market is presently quite volatile. Uncertainty levels are at an all-time high as the Fed fights against inflation and a weakening economy. The Fed cannot deploy quantitative easing to boost the economy, unlike in 2008 and 2020. Inflation will only get worse if this is done.

However, just because there is uncertainty in the stock market doesn’t mean investors should stay out. Contrarily, historically speaking, bear markets have been a great investment opportunity. Additionally, investors have choices on how to put their money to work. Buy safe investments to weather the short-term storm and steadily increase your wealth over time if you don’t have the stomach for more volatility or danger.

Pixabay/Public Domain

Our Methodology:

We turn to the smart money to see how they are playing the current turmoil. For this article we scanned Insider Monkey’s database of 895 hedge funds and picked some of the safest stocks these funds were piling into as of the end of June. These are safe, blue-chip companies. Some of them have long-term growth potential while others pay consistent dividend income without any uncertainty. Some of the notable names in the list include Apple Inc. (NASDAQ:AAPL), Visa Inc. (NYSE:V), and Alphabet Inc. (NASDAQ:GOOGL), among others.

Safe Stocks To Buy According To Hedge Funds

11. Colgate-Palmolive Company (NYSE:CL)

Number of Hedge Fund Holders as of Q2, 2022: 55

Colgate-Palmolive Company (NYSE:CL) specializes in producing and distributing healthcare, household, and personal care products. On October 17, Deutsche Bank analyst Steve Powers lowered his price target on Colgate-Palmolive Company to $85 from $87 but kept a Buy rating on the shares. The analyst anticipates Colgate-Palmolive Company to release a “solid set” of third-quarter financial results, with persistent pressure on gross margins offset by robust organic growth evenly distributed across all regional divisions including its per food segment Hill’s.

The company was a popular stock among elite funds in Q2 2022, as 55 hedge funds in Insider Monkey’s database owned stakes in the stock, up from 50 a quarter earlier. These stakes have a total value of nearly $3 billion.

According to CNBC, Third Point’s Loeb sees unrecognized value in Colgate-Palmolive Company Hill business. Here is what Third Point specifically said about Colgate-Palmolive Company in its Q3 2022 investor letter:

“Third Point recently acquired a significant position in Colgate-Palmolive Company (NYSE:CL). The investment fits several important criteria in the current investment environment. First, the business is defensive and has significant pricing power in inflationary conditions. Second, there is meaningful hidden value in the company’s Hill’s Pet Nutrition business, which we believe would command a premium multiple if separated from Colgate’s consumer assets. Third, there is a favorable industry backdrop in consumer health, with new entrants via spin-offs and potential for consolidation. Finally, the current valuation is attractive both because earnings growth is poised to inflect higher, and because shareholders are paying very little for the optionality around Hill’s or Colgate’s ability to participate in further consolidation in the consumer health sector.

Colgate has a strong portfolio of brands and operates across four categories that should perform well across most economic conditions: oral care, home care, personal care, and pet nutrition. Although Colgate has delivered organic sales growth of 5-6% over the past few years, earnings growth has been disappointing, and the stock has become a perennial underperformer. Foreign exchange headwinds have pressured reported results. Business reinvestment, supply chain disruption, and inflationary pressures have weighed heavily on margins; those headwinds are now reversing. Stepped up investments in demand generation, product innovation, and digital capabilities are starting to pay off. Global supply chain bottlenecks are easing and product availability on the shelf is improving. And, most importantly, raw material, transportation, and wage pressures are stabilizing, and even reversing in some areas, at the same time additional pricing takes effect. Taken together, the stage is set for Colgate to deliver several years of outsized earnings growth, as sales continue to increase, foreign exchange movements are annualized, and margins finally recover…” (Click here to view the full text)

10. The Coca-Cola Company (NYSE:KO)

Number of Hedge Fund Holders as of Q2, 2022: 60

The Coca-Cola Company (NYSE:KO) is a beverage manufacturer with a brand portfolio of 200 brands of soft drinks, coffee, teas, and water across more than 200 countries and regions. Berkshire Hathaway’s holding of The Coca-Cola Company remained unchanged during the second quarter of 2022, and the fund had an investment value of approximately $25 billion in the company at the end of Q2 2022. The fund is the leading shareholder of The Coca-Cola Company out of the 895 hedge funds tracked by Insider Monkey during Q2.

Given the relatively stable demand for its products, The Coca-Cola Company shares are up 0.39% year to date and the company remains very profitable despite the economic headwinds. It released its latest quarter results on October 25, reporting an EPS of $0.69, beating estimates by $0.05, and revenue of $11.10 billion, beating the estimates by $602.57 million.

On October 26, UBS analyst Peter Grom raised his price target on The Coca-Cola Company to $68 from $63 and kept a Buy rating on the shares. According to the analyst’s research note to investors, the company’s Q3 earnings performance was “impressive” since organic growth more than offset further currency challenges. The Coca-Cola Company risk/reward ratio appears positive, says Grom, given that its shares have recently underperformed and there is a possibility for better revenue growth to support a prolonged premium compared to its competitors.

At the end of the second quarter of 2022, 60 hedge funds in the database of Insider Monkey held stakes worth $28 billion in The Coca-Cola Company, compared to 64 in the preceding quarter worth $29 billion.

Here is what Aristotle Capital specifically said about The Coca-Cola Company in its Q2 2022 investor letter:

“The Coca-Cola Company (NYSE:KO), the global beverage business, was a leading contributor for the period. Coca-Cola continues to benefit from the refranchising of its bottling operations and realignment of incentives, catalysts we previously identified. These initiatives are demonstrating their strength in an inflationary and supply-chain-challenged environment. Additionally, the company has focused on evolving its customer engagement practices by leveraging digital and social medias for targeted campaigns, such as the design and launch of Coke Byte in the metaverse. Lastly, Coca-Cola has furthered its transformation into a total beverage company, as it debuted its new Jack Daniel’s Tennessee Whiskey and Coca-Cola ready-to-drink premixed cocktail. Although uncertainties surrounding cost pressures, lockdowns and geopolitical conflicts remain, we believe Coca-Cola is uniquely positioned to successfully continue its transition toward a total beverage business.”

09. Abbott Laboratories (NYSE:ABT)

Number of Hedge Fund Holders as of Q2, 2022: 61

Abbott Laboratories (NYSE:ABT) is an American manufacturer of healthcare products worldwide. It operates through four segments – Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices. On September 15, Abbott Laboratories declared a $0.47 per share quarterly dividend, which is payable on November 15 to shareholders of record on October 14. The forward yield was a solid 1.91%. Abbott Laboratories has increased its dividend payout for 50 consecutive years, making it a reliable dividend king.

On October 26, Mizuho analyst Anthony Petrone initiated coverage of Abbott Laboratories with a Neutral rating and a $105 price target. According to Insider Monkey’s data, 61 hedge funds held stakes worth $3.60 billion in Abbott Laboratories at the end of Q2 2022, compared to 68 funds in the earlier quarter worth $4 billion. Ric Dillon’s Diamond Hill Capital is a significant company shareholder, with 5.8 million shares worth $639.5 million.

Diamond Hill Capital discussed Abbott Laboratories in its Q3 2022 investor letter. Here is what the fund said:

“Also among our bottom contributors were health care products manufacturer Abbott Laboratories (NYSE:ABT), global pharmaceutical company Pfizer, media and technology giant Alphabet, and insurance company American International Group (AIG).

Abbott has been working through a recall of its infant formula brand Similac in the US, which has continued to pressure its share price. Although the recall will impact near-term revenues, we are not concerned about any long-term impacts. We remain optimistic about the company given it is one of the highest quality names in health care, in our view, with a talented management team that makes smart capital allocation decisions. Abbott also has leading health care and consumer franchises with a particularly strong competitive position in its medical device business. The company continues to launch innovative products in key strategic areas (such as diabetes, structural heart, and diagnostics), which should help drive not only revenue growth but margin expansion.”

08. PepsiCo, Inc. (NYSE:PEP)

Number of Hedge Fund Holders as of Q2, 2022: 65

PepsiCo, Inc. (NASDAQ:PEP) is an American multinational manufacturer and distributor of beverages and convenience foods worldwide. PepsiCo, Inc. reported strong earnings in its recently-published earnings report. The company posted an operating cash flow of $6.3 billion in the first nine months of the year. The company had over $6.4 billion in cash and cash equivalents, compared with $5.6 billion nine months ago.

On July 21, PepsiCo, Inc. declared a quarterly dividend of $1.15 per share, in line with its previous dividend. The company has been raising its dividends consistently for the past 50 years, which makes it one of the best dividend stocks. As of October 29, the stock has a forward dividend yield of 2.57%. Unlike the broader market, PepsiCo, Inc. hasn’t fallen much this year, with shares up 5.18% year to date. On October 14, Barclays analyst Lauren Lieberman raised his price target on PepsiCo, Inc. to $185 from $183 and kept an Overweight rating on the shares.

65 hedge funds we track owned shares of PepsiCo, Inc. at the end of the second quarter with Yacktman Asset Management holding over 4.25 million shares. Just like Apple Inc., Visa Inc., and Alphabet Inc., PepsiCo, Inc. is one of the safe stocks to buy according to hedge funds.

07. Walmart Inc. (NYSE:WMT)

Number of Hedge Fund Holders as of Q2, 2022: 67

Walmart Inc. (NYSE:WMT), the American multinational retail corporation, is one of the premier safe stocks to buy in 2022. On October 18, after taking over coverage of the name, Jefferies analyst Corey Tarlowe increased his price target for Walmart Inc. from $161 to $165 and maintained a Buy rating on the shares. Walmart Inc. is well positioned in the current climate as the value leader in retail.

Walmart Inc. currently pays a quarterly dividend of $0.56 per share. In 2022, the company marked its 49th consecutive year of dividend growth. As of October 28, the company’s shares have a yield of 1.59%.

Among the hedge funds tracked by Insider Monkey, 67 reported owning stakes worth $3.8 billion in Walmart Inc. at the end of June 2022, compared to 60 funds in the earlier quarter worth $6.6 billion. Rajiv Jain’s GQG Partners is the biggest stakeholder of the company, with 9.82 million shares worth $1.2 billion.

Here is what Leaven Partners has to say about Walmart Inc. in its Q3 2022 investor letter:

“In our last quarterly letter, I briefly mentioned that the consensus estimates for corporate profits appeared to be a bit too sanguine. I referenced a Reuters article that reported, as of June 17, Wall Street expected S&P 500 earnings to grow by 9.6% in 2022, which was up from 8.8% in April and from 8.4% in January. That tune began to change at the end of July and accelerated in August and September, as major players, such as Walmart (NYSE:WMT), has recently issued profit warnings and/or have withdrawn guidance. In response, Wall Street has altered its outlook: lowering third-quarter profit growth to 4.6%^[2] from 7.2% in early August and slashing full-year profit growth to 4.5%.”

06. The Procter & Gamble Company (NYSE:PG)

Number of Hedge Fund Holders as of Q2, 2022: 71

The Procter & Gamble Company is one of the oldest and largest consumer packaged goods companies in the world that was set up in 1837 and is based in Cincinnati, Ohio. The firm’s products include personal grooming, healthcare, and many other products. The Procter & Gamble Company is a dividend aristocrat, with the company having increased its dividend for 66 straight years. Given the dividend raises, The Procter & Gamble Company has a forward dividend yield of 2.77% as of October 28. The Procter & Gamble Company has a P/E ratio of 22.86, which is lower than the industry average of 25.

On October 20, Barclays analyst Lauren Lieberman raised his price target on The Procter & Gamble Company to $145 from $139 and kept an Overweight rating on the shares.

71 hedge funds we track owned shares of The Procter & Gamble Company at the end of Q2 2022, ranking it #6 on our list of 11 safe stocks to buy according to hedge funds. Out of these funds, Ray Dalio’s Bridgewater Associates is The Procter & Gamble Company largest investor. It owns 6.7 million shares that are worth $970 million. Another famous hedge fund, D E Shaw owned almost 3.7 million shares of The Procter & Gamble Company. Mr. Buffett’s Berkshire Hathaway owned 315,400 shares of the company that were worth $45 million during the same period.

Along with Apple Inc., Visa Inc., and Alphabet Inc., The Procter & Gamble Company is one of the safe stocks to buy according to hedge funds.

05. AbbVie Inc. (NYSE:ABBV)

Number of Hedge Fund Holders as of Q2, 2022: 71

AbbVie Inc. (NYSE:ABBV) is a Chicago, Illinois-based pharmaceutical company that came into being following its spin-off from Abbott Laboratories in 2013. AbbVie Inc. is a dividend king, given that it has increased its annual dividend for 50 consecutive years. With a forward dividend yield of 3.67% as of October 28, AbbVie Inc. also has a higher yield than some comparable companies in the pharmaceutical sector. On October 13, Morgan Stanley analyst Terence Flynn kept his Overweight rating and $185 price target on AbbVie Inc. while naming the stock his “Catalyst Driven Idea”.

According to Insider Monkey’s data, 71 hedge funds were bullish on AbbVie Inc. at the end of the second quarter of 2022, compared to 76 funds in the prior quarter. Rajiv Jain’s GQG Partners is the company’s largest stakeholder, with 9.82 million shares worth $1.2 billion.

Here is what Baron Funds specifically said about AbbVie Inc. in its Q3 2022 investor letter:

“AbbVie Inc. (NYSE:ABBV) is a drug developer best known for Humira, an immunosuppressant that is the best selling drug of all time. Given outsized key product risk (patent cliff and generic launches beginning in 2023), AbbVie has broadened its pipeline, highlighted by its Allergan acquisition. Shares fell on results that missed consensus and indications that legacy franchises were outperforming newer product launches, calling into question AbbVie’s long-term strategy. With promising assets in the pipeline and its robust cash flow profile, we believe AbbVie will grow well into the future.”

04. Johnson & Johnson (NYSE:JNJ)

Number of Hedge Fund Holders as of Q2, 2022: 83

Johnson & Johnson specializes in medical devices, pharmaceuticals, consumer products, and other packaged goods. Unlike the S&P 500, which has fallen 20.6% year to date, Johnson & Johnson shares are actually up 1.37% as of October 28. Despite macro pressures such as a strong U.S. dollar which makes Johnson & Johnson international earnings less in dollar terms, the company reported strong third-quarter results with 8.2% organic sales growth. In terms of its EPS, Johnson & Johnson had a relatively strong Q3 given adjusted EPS of $2.55 versus the consensus of $2.48. Sales for the period were $23.8 billion versus the consensus of $23.34 billion.

On October 19, Bernstein analyst Lee Hambright lowered his price target on Johnson & Johnson to $190 from $194 and kept a Market Perform rating on the shares. Johnson & Johnson is a dividend king, given it has increased its dividend for 60 consecutive years.

As of the close of Q2 2022, 83 hedge funds tracked by Insider Monkey owned stakes in Johnson & Johnson, with a total value of over $6.7 billion. In the previous quarter, 83 hedge funds owned stakes in the pharmaceutical company as well, worth over $7.4 billion.

Distillate Capital Partners LLC mentioned Johnson & Johnson in its Q2 2022 investor letter. Here is what the firm has to say:

“Johnson & Johnson was among the 2 largest trims at around 1% each. Each stock was up 1% in the quarter compared to the 16% price decline for the S&P 500 and the positions were reduced as the valuations became somewhat less appealing, though still attractive enough to warrant inclusion.”

03. Apple Inc. (NASDAQ:AAPL)

Number of Hedge Fund Holders as of Q2, 2022: 128

Apple Inc. is one of the most innovative companies in the world and has a history of releasing groundbreaking products that have revolutionized the tech industry. On October 28, Morgan Stanley analyst Erik Woodring, who kept an Overweight rating and $177 price target on Apple shares, said Apple Inc. September quarter beat and “in-line to above Street” December quarter guidance was “better than feared” and “illustrates the consistency of Apple’s ecosystem.”

Like other tech companies, Apple Inc. faces headwinds, expecting the strong dollar to negatively affect the company’s international earnings in fiscal Q1. For Q4, however, Apple Inc. performed pretty well. For the quarter, the company reported EPS of $1.29 on sales of $90.1 billion versus the consensus of $1.17 on sales of $88.9 billion for the fourth quarter. Apple Inc. also returned over $29 billion in capital to shareholders.

According to hedge funds, the stock is ranked high among the safe stocks to buy. At the end of Q2 2022, 128 hedge funds were bullish on Apple Inc. and held stakes worth $143 billion in the company. Of those, Berkshire Hathaway was the top shareholder in the company and held stakes worth $122 billion.

Here is what Wedgewood Partners had to say about Apple Inc. in its third-quarter 2022 investor letter:

“Apple Inc. (NASDAQ:AAPL) grew revenues +5% (foreign exchange adjusted and excluding Russia) driven by record iPhone revenues that were up about +3% on an exceptional year ago comparison of +50%. Apple’s installed base is over 1.8 billion devices which helps drive a software and services business that has generated almost $80 billion of revenue over the past 4 quarters. As we have highlighted in the past, Apple’s relentless focus on the development and integration between hardware (especially ICs) as well as software, continues to add significant value for customers of its products and services. We expect this favorable competitive dynamic to continue for the foreseeable future.”

02. Visa Inc. (NYSE:V)

Number of Hedge Fund Holders as of Q2, 2022: 166

Visa Inc. is a leading payment solution provider, with products used by consumers, businesses, and governments worldwide. In terms of its fiscal fourth quarter, payments at Visa Inc. grew 10% and processed transactions rose 12%. Sales rose to $7.79 billion from $6.56 billion and the company reported adjusted earnings of $1.93 per share, up 19% year over year. Given its earnings potential, Visa Inc. dividend is very secure. As of October 28, Visa Inc. shares yield 0.88%. The stock is currently trading at a PE multiple of 27x. Visa Inc. has a trailing twelve-month operating margin of 67.48% and free cash flows of $16 billion.

At the close of Q2 2022, 166 hedge funds were long Visa Inc. and held stakes worth $24 billion in the company. This is compared to 159 positions in the previous quarter with stakes of $28 billion. As of June 30, TCI Fund Management is the top shareholder in Visa Inc. and has stakes worth $3.92 billion in the company.

Here is what RiverPark Large Growth Fund has to say about Visa Inc. in its Q3 2022 investor letter:

“We reinitiated a small position in Visa, which we had previously owned for years (selling out of the position at higher levels in February). We continue to believe that the long-term secular growth trend towards digital payments remains intact and has been further enhanced by the COVID crisis. The growth in debit cards, contactless payments, e-commerce, and now, buynow-pay-later (BNPL), are all driving digital payment penetration, and we continue to be impressed with the long-term growth potential of V (and our other payment holdings Mastercard, Adyen, and PayPal).”

01. Alphabet Inc. (NASDAQ:GOOGL)

Number of Hedge Fund Holders as of Q2, 2022: 191

Alphabet Inc. (NASDAQ:GOOG) is one of the most innovative companies in the world and is constantly releasing new products and services. The stock is currently trading at a PE multiple of 18x and offers investors an optimal buying opportunity.

Alphabet Inc. reported softer than expected Q3 results, with Q3 EPS of $1.06 on sales of $69.09 billion versus the expected $1.25 and $70.61 billion. YouTube ad revenue fell to $7.07 billion from $7.21 billion, while Google Cloud sales rose to $6.87 billion from $6.75 billion in the same quarter of the previous year. While Alphabet Inc. faces near-term headwinds such as the strong U.S. dollar and a potential recession in 2023, the company, nevertheless, has substantial earnings growth potential given its leading position in search and mobile operating systems.

Bronte Capital discussed Alphabet Inc. in its Q3 2022 investor letter. Here is what the fund said:

Consensus longs—those stocks widely held and admired by fund managers—have recently underperformed the market. Consensus shorts have been bad shorts. We have over 500 shorts, of which a few are consensus, and we have noticed this effect. But we also own what we think is (alas) the most consensus long in this market: Alphabet Inc. (NASDAQ:GOOG). We find it hard to find any strong reason not to own it. Internet advertising is going from strength to strength and Google’s place in the market is mostly improving. Some of the other bets such as cloud services are beginning to pay off, and finally the CEO is expressing discipline on costs. (Per the consensus, the biggest problem with Google has been a lack of discipline on costs. Every time we look there are another 20 thousand employees.) Being a consensus long, it is down hard. We did say consensus longs are not going well…” (Click here to read the full text)