In this article, we discuss the 11 best bear market stocks to invest in now.
As of January 2025, the prevailing sentiment among US economic experts leans towards cautious optimism regarding the stock market’s trajectory. While concerns about potential downturns exist, explicit predictions of a bear market in 2025 are not prominent. For example, economists surveyed by The Wall Street Journal have adjusted their forecasts, anticipating higher inflation and interest rates in the coming years. They note that inflation has been higher than expected, with the consumer-price index rising 2.9% in December, leading to projections of continued inflation momentum into 2025. Despite these concerns, the US economy has demonstrated resilience, driven by strong consumer spending and a declining unemployment rate, which fell to 4.1% in December. Consequently, economists estimate a 22% chance of a recession in the next 12 months, marking the lowest probability in three years.
Jeremy Siegel, a renowned economist from the Wharton School, suggests that the stock market could experience a cooling-off period in 2025, particularly within the technology sector, amid concerns over the rapid adoption of artificial intelligence. He also anticipates that interest rates might decline, which could influence market dynamics. Additionally, MarketWatch reports that foreign retail investors have been purchasing US stocks at unprecedented rates, with $76.5 billion acquired in the last three months. Historically, such surges in foreign investment have preceded market downturns, as observed before the 1987 crash, the 2000 dot-com bubble burst, and the 2008 financial crisis. This pattern suggests that increased foreign investment may serve as a contrary indicator, signaling potential market peaks.
Read more about these developments by accessing 10 Best AI Data Center Stocks and 10 Buzzing AI Stocks According to Goldman Sachs.
Several economic experts also predict a bear market in 2025. For example, Cem Karsan, a volatility trader and founder of Kai Volatility, foresees a possible stock market decline of up to 40% within the next year, per a report by MarketWatch. He emphasizes that the Federal Reserve’s management of rate cuts and market expectations will be crucial. Karsan predicts that the 10-year Treasury yield could surpass 6% by the third quarter, which would exert additional pressure on stocks. He suggests that the Fed’s approach can either delay or accelerate the decline; a dovish stance might prolong the market rally but lead to a harder drop, whereas a hawkish stance could cause an earlier slide.
Similarly, Paul Krugman, a Nobel laureate and economist, has raised concerns that aggressive policy measures, such as imposing tariffs on China, could lead to inflation spikes and trade wars, potentially destabilizing the economy. He warns that such policies might exacerbate inflation and pressure the US labor market, contributing to economic instability. While these experts highlight potential risks, it’s important to note that market predictions are inherently uncertain. Other analysts maintain a more optimistic outlook for 2025. For instance, JP Morgan Research anticipates robust global economic growth, with the exception of a slowdown in China, and projects a price target of 6,500 for the S&P 500, with earnings per share of $270.
Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and Beyond the Tech Giants: 35 Non-Tech AI Opportunities.
Our list of the best bear market stocks to buy is grounded in hedge fund sentiment towards each stock. These selections are derived from sectors such as consumer staples, utilities, and healthcare, given their historical resilience and stability even during economic downturns. A considerable number of these stocks present enticing annual dividend yields and possess defensive attributes that enable them to maintain stability in a bear market. Additionally, we’ve identified promising tech stocks that currently pose as appealing entry opportunities for investors. 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).
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Best Bear Market Stocks To Invest In Now
11. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 68
AbbVie Inc. (NYSE:ABBV) is a global biopharmaceutical company focused on creating medicines and solutions that put impact first — for patients, communities, and the world. The following elements demonstrate why this company is an excellent investment choice. Firstly, the report for the third quarter of 2024 indicates the company’s strong performance driven by its core business activities. For instance, worldwide net revenues were $14.46 billion, an increase of 3.8% on a reported basis or 4.9% on an operational basis. Moreover, global net revenues from the oncology portfolio were $1.687 billion, an increase of 11.6% on a reported basis or 13% percent on an operational basis, which reflects a solid performance in the oncology business, with significant growth driven by operational factors. The report also shows an increase in the company’s quarterly cash dividend from $1.55 per share to $1.64 per share, beginning with the dividend payable on February 14, 2025, to shareholders of record. This shows an increase of approximately 5.8%, continuing AbbVie’s strong commitment to returning cash to shareholders through a growing dividend. Lastly, AbbVie and Gedeon Richter announced a new discovery, co-development and license agreement to advance novel targets for the potential treatment of neuropsychiatric conditions. This collaboration expands upon the success of nearly two decades of partnership on CNS projects.
10. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 68
The Procter & Gamble Company (NYSE:PG) provides branded consumer packaged goods. This company presents a solid investment opportunity, supported by the following points. Firstly, the company’s financial management and operational efficiency are reflected in the report for the fiscal year 2024. For instance, organic sales grew 4%, core earnings per share grew 12%, on a currency-neutral basis, core earnings per share were up 16% and adjusted free cash flow productivity was 105%. Moreover, the company maintained a strong track record of cash return to shareowners—returning over $14 billion of value to shareowners through just over $9 billion in dividends and $5 billion in share repurchase. This reflects the company is committed to rewarding shareholders through both regular dividend payouts and share buybacks. Lastly, P&G leverages AI by integrating projects like Project Genie, which uses AI to provide information to over 800 Customer Service Reps.
9. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 81
Johnson & Johnson (NYSE:JNJ) researches and develops, manufactures, and sells various products in the healthcare field. This company emerges as a prime investment opportunity for several reasons. First and foremost, the report for the fiscal year 2024 shows the company’s core operational performance. For instance, the reported earnings per share (EPS) was $1.41, and the adjusted EPS was $2.04. Moreover, the company reported sales growth of 5.3% to $22.5 billion, which indicates a solid increase in revenue. The operational growth of 6.7% shows the company’s stellar performance from its core business operations, excluding external factors like currency fluctuations. The company has a 5-year growth rate of 5.54% that reflects a consistent commitment to growing shareholder returns through dividends, signaling financial stability. Lastly, Johnson & Johnson has strengthened neuroscience leadership with the acquisition of Intra-Cellular Therapies.
8. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 86
Exxon Mobil Corporation (NYSE:XOM) operates as an integrated oil and gas company and is headquartered in Texas. This company presents a solid investment opportunity, supported by the following points. Firstly, the company’s ability to generate profits is evident in the report for the third quarter of 2024. For instance, improved earnings power from an enterprise-wide transformation drove industry-leading net income of $8.6 billion. Additionally, the company returned $9.8 billion to shareholders in the quarter and increased its fourth-quarter dividend to $0.99 per share, which demonstrates the company’s strong financial position and its focus on providing higher returns to investors by increasing regular dividend payouts. Moreover, the company has expanded oil production offshore in Guyana with a new multi-billion-dollar Hammerhead project, which would increase production capacity and strengthen the company’s presence in the Guyanese oil sector.
7. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 88
Walmart Inc. (NYSE:WMT) engages in the operation of retail, wholesale, and other units worldwide. There are several compelling factors that make this company a strong investment. Firstly, the report for the third quarter of 2024 shows the company’s strong performance in the US market and its ability to maintain growth. For instance, Walmart US had net sales of $441.8 billion, representing 69% of consolidated net sales, and had net sales of $420.6 billion and $393.2 billion for fiscal 2023 and 2022, respectively. In addition, the company has a consistent record of returning value to shareholders, with total dividend payments of $6.1 billion in fiscal 2024, $6.1 billion in fiscal 2023, and $6.2 billion in fiscal 2022. Walmart has approved an increase in the fiscal 2025 annual dividend to $0.83 per share, up from $0.76 in fiscal 2024. Moreover, the expanded partnership of Walmart with Symbiotic aims to develop an advanced AI-enabled robotics solution aimed at enhancing online pickup and delivery options. The firm has invested $520 million towards this project.
6. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 98
Bank of America Corporation (NYSE:BAC) provides banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, large corporations, and governments. The worth of the firm as an attractive investment is highlighted by the following factors. Firstly, as per the report for the fourth quarter of 2024, the revenue of $25.3 billion represents a 15% increase, driven mainly by higher fees from asset management, investment banking, and sales and trading activities. Also, the net income was $6.7 billion, or $0.82 per diluted share, compared to $3.1 billion, or $0.35 per diluted share, in the fourth quarter of the prior year, reflecting the company’s strong profitability growth and improved performance. Moreover, the company has a consistent record of returning value to shareholders as it returned $5.5 billion to shareholders, with $2 billion through dividends and $3.5 billion via share repurchases. The return on average common shareholders’ equity of 9.4% and return on average tangible common shareholders’ equity of 12.6% reflect the company’s efficient use of equity to generate profits.
5. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 112
United Group Incorporated (NYSE:UNH) operates as a diversified healthcare company in the United States. The following key aspects make this company a standout investment. To start with, the company’s strong financial performance and increasing demand for its services are reflected in its report for the fourth quarter of 2024. For instance, revenue was $400.3 billion, which grew 8% year-over-year and domestic consumers served by the company grew to 2.1 million. This reflects the company’s ability to expand its market reach and success in attracting and retaining members. Moreover, during 2024, the company returned over $16 billion to shareholders through dividends and share repurchases. Return on equity of 23.7% in the fourth quarter reflected the company’s consistent, broad-based earnings and efficient capital structure. Lastly, the company’s $4.5 million strategic partnership with Goodwill Industries International aims to increase access to education and training, health-related social needs support and workforce development opportunities in 25 states through 38 Goodwill organizations.
4. Berkshire Hathaway Inc. (NYSE:BRK-B)
Number of Hedge Fund Holders: 120
Berkshire Hathaway Inc. (NYSE:BRK-B) is an Omaha-based conglomerate with interests in transport, insurance, and other businesses. There are several compelling factors that make this company a strong investment. Firstly, as per the report for the third quarter of 2024, Berkshire’s shareholders’ equity in September 2024 was $629.1 billion, representing an increase of $67.8 billion since the prior year, which reflects strong growth in its net worth. The net earnings of $69.3 billion for the first nine months reflect healthy profitability, with $36.4 billion stemming from after-tax investment gains. Moreover, the company has acquired 1.28 million shares of Domino’s Pizza, valued at approximately $549 million, which reflects a strategic move into the food service industry.
3. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 158
Apple Inc. (NASDAQ:AAPL) is a consumer electronics firm. This company emerges as a prime investment opportunity for several reasons. First and foremost, the company’s robust financial health is depicted in the report for the fourth quarter of 2024. For instance, the total revenue was $94.9 billion, increasing 6% year over year, and quarterly diluted earnings per share was $0.97. This shows the increasing demand for the company’s products or services and its ability to generate earnings for shareholders. Moreover, the company has a consistent record of returning value to shareholders through dividends and share repurchase programs. In fiscal 2024, the company declared quarterly dividends of $0.24 per share, totaling $0.96 per share annually. Secondly, the company has also introduced a general health-monitoring tool in all its new devices. For instance, an Apple Watch can monitor heart rate, check for atrial fibrillation, detect falls and car crashes, monitor blood-oxygen levels, and track body temperature for fertility planning.
2. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 165
Visa Inc. (NYSE:V) is a California-based payments technology firm. The following key aspects make this company a standout investment. Firstly, the company’s robust infrastructure and market leadership in facilitating seamless digital payments worldwide make the company stand out. As per the annual report for 2024, Visa’s total payments and cash volume were $16 trillion, and the Visa network processed 234 billion total transactions — 639 million transactions every day. This reflects its dominance in the global payment ecosystem, showcasing extensive usage by consumers and businesses. In addition, as per the report for the fourth quarter of 2024, net revenue was $9.6 billion, showing an increase of 12% on a nominal and constant-dollar basis. Moreover, the company has a consistent history of returning value to shareholders through dividends and share repurchases. The company has returned $20.9 billion to shareholders, comprising $6.8 billion in share repurchases and $14.1 billion in dividends in fiscal year 2024. Secondly, the company’s strategic collaboration with JP Morgan aims to enhance merchant experiences, empower cardholders, and drive innovation for JP Morgan Payments’ customers with the introduction of faster domestic payments in the US through the Visa Direct network.
1. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 202
Alphabet Inc. (NASDAQ:GOOGL) is a California-based technology company that owns and runs the internet search engine Google. The following elements demonstrate why this company is an excellent investment choice. First of all, the report for the third quarter of 2024 demonstrated the company’s robust business expansion and adaptability across markets. For instance, consolidated revenues increased 15% in constant currency, year over year, to $88.3 billion, reflecting strong momentum across the business. The company has also introduced a quarterly dividend of $0.20 per share and a new $70 billion share repurchase authorization, which reflects the company’s strong financial position and commitment to returning value to shareholders. Additionally, the company has launched conversational AI, Search Generative Experience, into Google Search, which would enhance search capabilities by summarizing and organizing search results with AI-driven insights for better user engagement. Lastly, Alphabet’s Google Health launched Med-PaLM 2, an AI that can answer medical questions accurately.
While we acknowledge the potential of Alphabet Inc. (NASDAQ:GOOGL) as an investment, our conviction lies in the belief that some stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a stock that is more promising than Alphabet Inc. (NASDAQ:GOOGL) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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