In this article, we discuss the 10 best low volatility stocks to invest in now along with the latest updates around the market and political situation of the US.
Market Begins November on a Dynamic Note
The first week of November has been quite eventful so far. Presidential candidate Donald Trump won the election and President Joe Biden, speaking from the Rose Garden after the election, pledged a peaceful transition of power on January 20.
Moreover, Federal Reserve Chair Jerome Powell announced a quarter-point rate cut on November 7, aimed at supporting strong employment and steady inflation. Economic indicators show solid growth, with GDP rising by 2.8% in the third quarter and consumer spending remaining strong. While the housing sector remains weak, other areas like equipment investment have strengthened.
The labor market shows resilience despite a slowdown in job gains and an uptick in the unemployment rate to 4.1%. Inflation has cooled significantly, nearing the Fed’s 2% target. However, core inflation remains slightly above that level.
In response to questions, Chair Powell noted that the U.S. election isn’t expected to influence near-term Fed policy, as future policy changes and their economic effects remain uncertain. He acknowledged that higher Treasury yields likely reflect expectations of stronger economic growth rather than inflation concerns.
Looking ahead to December, Powell stated that the Fed will assess data on inflation, employment, and economic growth to determine if further policy recalibration is needed. He emphasized the Fed’s effort to balance rate adjustments to avoid moving too quickly or too slowly, aiming to sustain a strong labor market while bringing inflation closer to the 2% target.
The market is taking the news well and all three major market indices closed at all-time highs on November 7. While things seem to be on track, it is important to note that such events sometimes also bring volatility and uncertainty.
Read Also: 10 Best Stocks Under $100 To Invest In and 10 Best Stocks to Buy and Hold For 5 Years.
Economic Outlook in an Era of Unpredictable Policies
In a recent interview on CNBC’s Squawk Box, Former Federal Reserve Vice Chairman Roger Ferguson discussed the complexities surrounding recent economic and policy changes. Ferguson noted that the Federal Reserve’s approach remains cautious, taking a “wait-and-see” stance to assess how policies impact the economy.
He mentioned Fed Chair Powell’s resistance to providing overly specific future guidance and instead emphasized data-based decisions. Additionally, Ferguson highlighted that external factors such as tariffs and changes in the energy market could create varied inflationary pressures. While deregulation might counterbalance some inflation risks, tariffs could still add complexity.
The conversation touched on the “neutral rate,” with Ferguson indicating that it will play a crucial role moving forward, especially given shifts in bond yields and their impact on inflation expectations. Ferguson conveyed that uncertainty in policy directions requires flexibility in economic responses, with ongoing adjustments as more details unfold.
With that, we look at the 10 Best Low Volatility Stocks to Invest in Now.
10 Best Low Volatility Stocks to Invest in Now
Our Methodology
For this article, we used the Yahoo Finance stock screener to identify around 250 large to mega-cap stocks with a 5-year beta (monthly) between 0.2 and 0.8. We narrowed our list to 10 stocks most widely held by institutional investors and listed them in ascending order of their hedge fund sentiment. The hedge fund sentiment was taken from Insider Monkey’s Q2 database of over 900 elite hedge funds.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Low Volatility Stocks to Invest in Now
10. Boston Scientific Corporation (NYSE:BSX)
Number of Hedge Fund Holders: 82
5-year Beta (Monthly): 0.8
Boston Scientific Corporation (NYSE:BSX) creates medical devices for global use in interventional specialties. Its two main segments, MedSurg and Cardiovascular, offer products for gastrointestinal, pulmonary, urological, and neurological treatments, as well as cardiac care, including defibrillators, pacemakers, and heart monitors. The company also develops tools for vascular and cancer treatments.
On November 4, Boston Scientific (NYSE:BSX) agreed to acquire Cortex, Inc., a company focused on developing a diagnostic tool to identify atrial fibrillation (AF) triggers outside the pulmonary veins. Cortex’s OptiMap System uses a unique mapping approach to support targeted cardiac ablation, aiming to improve outcomes for AF patients. AF is a common type of arrhythmia, or irregular heartbeat, where the upper chambers of the heart (atria) beat out of sync with the lower chambers (ventricles).
The technology, which received FDA clearance in 2023, showed promising results in a clinical trial. Compared to standard procedures, it increased freedom from AF by 51% one year after treatment.
The company expects the acquisition to close in the first half of 2025. However, amortization and acquisition costs may slightly reduce GAAP earnings. Some analysts view this acquisition as quite beneficial to the company.
On November 4, TipRanks reported that Canaccord Genuity analyst William Plovanic reaffirmed a Buy rating on Boston Scientific (NYSE:BSX) with a $98 price target. The analyst attributed this to growth potential due to the acquisition of Cortex and its OptiMap atrial fibrillation mapping technology.
OptiMap strengthens the company’s offerings by improving AF diagnosis beyond traditional methods. While the acquisition may have a limited short-term impact on earnings, its integration is expected to boost the company’s market position and align with its growth and innovation goals in the biomedical field.
Janus Henderson Enterprise Fund stated the following regarding Boston Scientific Corporation (NYSE:BSX) in its Q2 2024 investor letter:
“Medical device company Boston Scientific Corporation (NYSE:BSX) was another contributor. The stock rose on excitement over the company’s U.S. launch of FARAPULSE, a state-of-the-art pulsed field ablation system that treats atrial fibrillation with less damage to surrounding tissues relative to previous therapies. Boston Scientific is currently the only provider of this technology, which taps into a large and growing addressable market. Even beyond our excitement around FARAPULSE, we continue to like Boston Scientific for its diversified product portfolio, which has provided many potential drivers of revenue growth.”
9. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 84
5-year Beta (Monthly): 0.62
Pfizer Inc. (NYSE:PFE) is a global biopharmaceutical company that develops and markets medicines and vaccines across areas like cardiovascular, metabolic, infectious diseases, and COVID-19. It offers biosimilars, treatments for rare diseases, and biologics. The company collaborates with companies like Bristol-Myers Squibb and BioNTech, serving wholesalers, hospitals, and pharmacies.
While Pfizer (NYSE:PFE) did not perform well over the last three years in terms of share price, the company is showing positive signs for the future. The share price performance is mainly attributed to reduced demand for its COVID-19 vaccine, compounded by upcoming patent expirations for other key products.
The company is focusing on improving efficiency through its Manufacturing Optimizing Program, which aims to save $1.5 billion by 2027. It also acquired the biotechnology firm Seagen for $43 billion, with expectations that it will generate over $10 billion in revenue by 2030.
Moreover, Pfizer’s (NYSE:PFE) extensive drug pipeline and strategic acquisitions position it for significant growth, with new product launches projected to add $20 billion to its revenue by 2030.
The company reported strong results in its latest quarter as it reported its Q3 earnings on October 29, where it showed robust performance across multiple areas. Its non-GAAP EPS of $1.06 exceeded the estimates by $0.45 and revenues were up over 32% at $17.7 billion, outperforming the estimates by $2.83 billion.
Pfizer (NYSE:PFE) raised its full-year revenue guidance for the second quarter in a row to a range of $61 to $64 billion from the prior $59.5 billion to $62.5 billion range. It also raised its adjusted diluted EPS outlook to a range of $2.75 to $2.95 compared to prior guidance of $2.45 to $2.65 range.
8. PDD Holdings Inc. (NASDAQ:PDD)
Number of Hedge Fund Holders: 86
5-year Beta (Monthly): 0.70
PDD Holdings Inc. (NASDAQ:PDD) is a multinational commerce group that operates a variety of businesses, including the e-commerce platform Pinduoduo, which offers a wide range of products such as agricultural goods, apparel, electronics, and household items, and Temu, an online marketplace.
It is seeing strong growth, largely driven by its ownership of the rapidly expanding online marketplace Temu, which is gaining traction in Europe and North America. The company’s success stems from its ability to bring large groups of buyers together to negotiate lower prices from suppliers, offering savings to users.
PDD Holdings Inc. (NASDAQ:PDD) has been showing a strong performance since 2023 as it has outperformed the EPS estimates and has increased its per-share earnings in every quarter since the first quarter of 2023. Moreover, the company’s TTM net income has grown by nearly 140% year-over-year, and over the last 5 years, it has reported a nearly 75% compound annual growth rate in revenue.
Analysts see quite a significant upside to PDD’s (NASDAQ:PDD) stock and its EPS. According to Yahoo Finance data, the company is expected to report an EPS of $11.93 in the current year, up 82.4% from 2023.
Furthermore, the company’s stock has been covered by 47 analysts and most of them maintain a Buy equivalent rating for the stock. Their average price target of $168.73 represents an upside of nearly 34.05% from current levels on November 7.
7. The Progressive Corporation (NYSE:PGR)
Number of Hedge Fund Holders: 89
5-year Beta (Monthly): 0.37
The Progressive Corporation (NYSE:PGR) offers personal and commercial auto, property, and specialty insurance in the U.S. It operates through three segments: Personal Lines (auto and recreational vehicles), Commercial Lines (business vehicle and liability coverage), and Property (residential and renters’ insurance). Its products are sold through independent agencies, mobile apps, and phone services.
In the third quarter, Progressive (NYSE:PGR) reported solid earnings with GAAP EPS of $3.97 outperforming the estimates by $0.08. Its revenue of $19.46 billion was up nearly 31% year-over-year and exceeded the estimates by $400 million. The company reported a combined ratio of 89%. The combined ratio is a key financial metric used by insurance companies to measure their profitability and efficiency.
A combined ratio under 100% indicates that the company is making an underwriting profit, which means that it is paying out less in claims and expenses than it is earning in premiums, while a combined ratio over 100% suggests an underwriting loss.
In addition, Progressive (NYSE:PGR) achieved record growth with nearly 1.6 million new policies added, driven by strong demand and an increase in media spending. Both direct and agency channels saw significant growth, with record-high direct channel applications and strong customer conversions. Despite historically lower sales in Q4, the company aims to maintain this momentum and continue capturing market share.
The investment management firm, The London Company also commended the company on its increasing market share in its third quarter 2024 investor letter. The firm said that Progressive (NYSE:PGR) has been a strong performer, increasing market share and improving margins through better segmentation of underwriting risks and strategic pricing. The company met its profitability goals by reducing advertising expenses and targeting preferred customers. The firm’s confidence remains high in Progressive’s (NYSE:PGR) ability to perform in various market conditions, thanks to its competitive strengths and effective capital allocation strategy.
6. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 91
5-year Beta (Monthly): 0.34
Alibaba Group Holding Limited (NYSE:BABA) provides technology infrastructure and marketing services to support merchants, brands, and retailers in China and globally. The company operates across several key segments. The company also offers cloud solutions, digital mapping, and productivity tools, plus a range of e-commerce and marketing services across various global platforms.
Two main themes are affecting Chinese stocks such as Alibaba (NYSE:BABA). First, investor wariness stems from the Chinese government’s unpredictable interventions, as seen when Alibaba’s (NYSE:BABA) stock dropped from around $350 to under $100 after regulatory actions three years ago. Second, U.S.-China tensions add pressure, with tariffs and tech restrictions slowing China’s economy, casting doubt on reported growth rates.
Since 2022, its net income has stagnated, suggesting either economic slowdown or competitive challenges. In September, hopes rose for major Chinese government stimulus, briefly lifting Chinese stocks, but gains faded due to limited follow-through.
Between November 4 to 8, China’s National People’s Congress (NPC) Standing Committee is meeting in Beijing, where it unveiled a five-year, 10 trillion yuan ($1.4 trillion) package to address local government debt, with additional economic support anticipated next year. Normally, China’s fiscal budget is submitted by the finance ministry to the NPC in March for approval, but the NPC Standing Committee can authorize mid-year adjustments, including changes to the fiscal deficit, special treasury bond quotas, and local government debt limits.
In a September 26 interview with CNBC, David Tepper of Appaloosa Management shared his views on global markets, highlighting China’s aggressive fiscal and monetary stimulus, which includes measures to encourage consumption, stock buybacks, and offering low-risk borrowing for stock purchases. He sees these efforts as a strong boost for Chinese equities, which he views as undervalued compared to U.S. stocks. He sees China’s aggressive stimulus and undervalued equities as significant investment opportunities, while still remaining a little cautious.
Alibaba (NYSE:BABA) also seems to be one of the cheap undervalued Chinese stocks as it is trading at a forward PE ratio of 10.91x, a 37.76% discount to its sector median.
5. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 95
5-year Beta (Monthly): 0.52
Walmart Inc. (NYSE:WMT) is a global retailer that provides customers with accessible shopping options through its retail stores, eCommerce platforms, and various service offerings. The company operates 10,500 stores and several eCommerce websites in 19 countries. Its stores and websites are visited by around 255 million customers each week.
The company’s different segments include Walmart U.S., Walmart International, and Sam’s Club. Walmart U.S. is its largest division, contributing the highest percentage of revenue, and operates in all 50 states as well as Puerto Rico and Washington, D.C. Walmart U.S. provides an omnichannel experience, including in-store pickup, same-day delivery, and Walmart+, a membership that offers additional benefits like free shipping and fuel discounts.
According to its last 10-k filings, Walmart’s (NYSE:WMT) highest sales volume usually occurs in its fiscal quarter ending January 31. It is usually because of the holiday season and the company is already gearing up for it. On October 31, The New York Times reported the company’s holiday preview event in Orlando which offered insights into its strategy for the high-stakes holiday season.
Executives highlighted plans for extensive discounts, with “25 percent more” rollbacks in toys compared to last year, and cuts on Thanksgiving staples, which aim to cater to budget-conscious shoppers. Despite economic uncertainties and a shorter holiday shopping season, Walmart (NYSE:WMT) leaders expressed optimism, supported by steady sales growth and confidence in their approach to customer service and promotions. The effort to keep prices low and predict consumer needs is expected to help the company stay competitive against retailers like Macy’s and Kohl’s, who are seeing softer demand.
4. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 96
5-year Beta (Monthly): 0.41
Merck & Co., Inc. (NYSE:MRK) is a global healthcare company divided into two main segments: Pharmaceutical and Animal Health. The Pharmaceutical segment offers a wide range of human health products, including treatments for oncology, immunology, neuroscience, and more, with notable brands such as Keytruda, Gardasil, Winrevair, and Bravecto, with Keytruda standing out as a major success in immuno-oncology for treating various cancers.
Concerns about Keytruda’s (the company’s most successful drug) U.S. patent expiration in 2028 have led to discounted stock prices and also made it to our list of the worst performing dow stocks. However, the company still currently has a strong product pipeline, and its late-stage clinical development programs include 80 programs in Phase 2, over 30 in Phase 3, and 10 programs under review.
Although Keytruda’s patent expiration remains a cause for concern among investors, Merck (NYSE:MRK) still has a few years left for it. In the third quarter, the company’s total worldwide sales were up 4% year-over-year at $16.7 billion and Keytruda sales grew 17% (21% excluding the impact of foreign exchange) to $7.4 billion.
Moreover, analysts see the company’s new product launches such as Winrevair, and the company’s fundamentals in a positive light. On November 1, TipRanks reported that BMO Capital maintained a Buy rating on the company stock with a price target of $136. Despite a decline in Gardasil (the company’s HPV vaccine) revenues in China, leading to reduced revenue projections for 2024 and 2025, Seigerman believes Merck’s (NYSE:MRK) business fundamentals remain strong.
The analyst views the company’s share price drop since Q2 2024 as an overreaction. He highlighted the growth potential in Winrevair, driven by increasing demand and upcoming trials in 2025.
3. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 100
5-year Beta (Monthly): 0.42
Eli Lilly and Company (NYSE:LLY) is a global pharmaceutical firm that focuses on discovering, developing, and marketing medications. It offers a range of diabetes and obesity treatments, oncology as well as medications for various conditions such as rheumatoid arthritis, migraine prevention, and erectile dysfunction.
The company also operates the Lilly Seaport Innovation Center in Boston, which focuses on RNA and DNA-based therapies and finding new drug targets for conditions like obesity and chronic pain. The company collaborates with several other pharmaceutical firms as well.
Eli Lilly’s (NYSE:LLY) third-quarter performance showed impressive revenue growth due to several factors. However, it missed expectations despite the growth. The surge was led by the success of new products, especially Mounjaro and Zepbound, the company’s diabetes and obesity drugs, accounting for $3 billion of the total $11.44 billion revenue (total revenue was up 20% year-over-year).
Nevertheless, their sales were still lower than expected as the company attributed this shortfall not to a lack of demand, but to wholesalers reducing their inventory of these medications. According to the company, it had successfully completed back orders in the previous quarter, which increased stock levels. Wholesalers then used that stock instead of ordering more, leading to lower sales for both drugs.
Due to these factors, Eli Lilly’s (NYSE:LLY) stock experienced a significant sell-off after its earnings report on October 30 and was down over 8% in a day. JPMorgan analyst Chris Schott sees the decline in its shares as a buying opportunity. The Fly reported on October 31 that the analyst maintained an Overweight rating on the stock with a price target of $1,100.
Schott noted that despite the company’s results falling short of expectations due to wholesaler destocking of Mounjaro and Zepbound, the underlying business volume trends remain strong. He anticipates a substantial increase in sales for the fourth quarter as capacity increases and demand-generating efforts are improved.
Eli Lilly (NYSE:LLY) also reported strong performance across its oncology, immunology, and neuroscience portfolios, with a 17% growth in non-hormonal medication revenue. Key pipeline milestones included U.S. approval of Ebglyss for atopic dermatitis and Kisunla for early symptomatic Alzheimer’s disease. The company plans to submit a supplemental application to the FDA for a modified dosing regimen for donanemab after positive results in reducing ARIA (amyloid-related imaging abnormalities) were observed in a Phase 3 trial.
2. Thermo Fisher Scientific Inc. (NYSE:TMO)
Number of Hedge Fund Holders: 108
5-year Beta (Monthly): 0.78
Thermo Fisher Scientific Inc. (NYSE:TMO) offers a range of products and services in life sciences solutions, analytical instruments, specialty diagnostics, and laboratory products, catering to various markets worldwide.
Thermo Fisher (NYSE:TMO) reported mixed earnings on October 24, with EPS of $5.28 slightly exceeding the estimates but revenue of $10.6 billion lagged the forecasts by $30 million. The company raised its full-year EPS guidance to a range of $21.35 to $22.07, compared to the prior outlook of $21.29 to $22.07. The company’s revenue guidance remained unchanged between the range of $42.4 billion to $43.3 billion.
Despite mixed results, analysts view the stock in a positive light. As reported by TipRanks on October 25, Morgan Stanley’s Tejas Savant kept a Buy rating on Thermo Fisher (NYSE:TMO) with a $670 price target based on the company’s steady third-quarter performance, with organizational revenue growing sequentially for three quarters despite pandemic challenges.
Adjusted EPS also exceeded expectations, aided by strong cost control and reduced interest expenses. Strategic investments are boosting productivity, and the company’s cautious management of market challenges suggests a promising trajectory through 2025, despite some uncertainty in the broader market.
Moreover, on October 24, The Fly reported that RBC Capital maintained an Outperform rating on the company stock but reduced the company’s price target from $767 to $718. The firm found the insights from the company’s Q3 earnings call to be more optimistic than the actual results. It continues to have a favorable view of the stock and noted that the Life Sciences Solutions segment is experiencing positive momentum in bioproduction. Additionally, sales in the Laboratory Products and Biopharma Services segments are not showing signs of a slowdown in the biotech industry, according to the analyst’s commentary to investors.
1. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 114
5-year Beta (Monthly): 0.59
UnitedHealth Group Incorporated (NYSE:UNH) is a leading healthcare and well-being company, providing a range of health benefits and services to improve the quality and accessibility of care. Operating through its two primary divisions, UnitedHealthcare and Optum, the company supports individuals, employers, and government programs across the U.S. and internationally.
It delivers health insurance plans and services, focusing on the needs of individuals, families, and specialized populations, while Optum integrates health services and technology to enhance care delivery, manage complex medical needs, and optimize healthcare costs.
UnitedHealth (NYSE:UNH) reported strong Q3 earnings with non-GAAP EPS of $7.15 outperforming the estimates by $0.12 and revenue of nearly $101 billion was up over 9%, exceeding the estimates by $1.52 billion. It was driven by $2 billion growth in OptumHealth, $5 billion in OptumRx, and stability in OptumInsight, with a $33 billion backlog.
The company expanded its domestic commercial membership by over 2.4 million in the first three quarters, while Medicaid business secured new contracts across multiple states. It expects growth in Medicare Advantage and OptumRx. The company plans a conservative start to 2025 given the second year of Medicare rate cuts, IRA impacts, and Medicaid funding lags but aims for steady progress on its long-term objectives.
UnitedHealth’s (NYSE:UNH) adjusted earnings for 2024 are projected between $27.50 and $27.75 per share, factoring in disruptions from a recent cyber-attack and unexpected care costs. We discussed the cyber attacks in our 10 Worst Performing Dow Stocks Year-to-Date article.
In its Q3 investor letter, Wedgewood Partners said that the company was a top contributor to the portfolio in Q3 as its shares rebounded over the quarter. By adjusting Healthcare pricing and focusing on value-based care through Optum, which saw over 15% income growth, UnitedHealth (NYSE:UNH) effectively counters medical cost inflation. This strategy, particularly beneficial for Medicare, reduces healthcare costs and improves patient outcomes through preventive and home-based care.
Moreover, Baron Health Care Fund stated the following regarding UnitedHealth Group Incorporated (NYSE:UNH) in its Q3 2024 investor letter:
“UnitedHealth Group Incorporated (NYSE:UNH) is a leading health and well-being company that operates across four segments: UnitedHealthcare, Optum Health, OptumInsight, and OptumRX. Despite complex Q2 results that involved multiple adjustments and an elevated medical loss ratio that management attributed to a cyberattack on its Change Healthcare platform, shares increased on positive management comments and reaffirmation of adjusted EPS guidance for 2024. We believe UnitedHealth should continue to see strong growth and profitability, driven by positive demographic trends and its ability to manage costs by leveraging its size and scale, continuing its industry-leading technology investments, expanding its expertise in population health, and growing its portfolio of providers.”
While we acknowledge the potential of UnitedHealth Group Incorporated (NYSE:UNH) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than UNH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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