In this article, we will take a look at some of the best safe stocks to buy according to hedge funds.
In times when you never know what you’ll wake up to the next morning, playing safe seems to be the wisest choice. Amid consistent market shifts and global uncertainties, it’s difficult not to lean towards reliability. With rising global recession risks and political uncertainties, protecting the capital has become a priority for many. As Charlie Munger, Vice Chairman of Berkshire Hathaway, once said,
“The idea of investing in a company just because it’s safe is not necessarily a good idea. But it’s a much better idea than investing in something that is clearly risky.”
If we think about a “safe” stock, a low-risk stock usually comes to our mind. While it’s true, there is even more to it. A safe stock generally stems from a well-established company possessing a strong balance sheet, a track record of decent performance, solid market positioning, and a dividend history. So, when looking for a safe stock, it’s important to look for not one, not two, but all of these metrics. In its entirety, these are usually “blue chip stocks” that are market leaders in the industries they operate.
Hedge funds, recognized for their strategies and in-depth market understanding, have long advocated for such stocks for their reliability and resilience. These managers carefully study the market trends and then weigh in on businesses that are deemed to deliver both value and predictability.
As reported by Reuters, hedge funds are fleeing the stocks of companies that are providing what customers want, and what they don’t need. As the signs of a global recession are becoming more and more evident, hedge funds are dumping their positions in consumer discretionary. “Hedge funds dumping consumer discretionary stocks strongly suggests they’re bracing for economic trouble, likely a recession,” mentioned Bruno Schneller, the Managing Director at Erlen Capital Management.
Similarly, a Goldman Sachs report, comparing the gains by Hedge Fund VIP basket and the broader market, indicates that the top 50 stocks preferred by hedge funds have collectively returned 10% in 2025 relative to the market’s 3% gain.
In a “Low-Risk Stocks Outperform within All Observable Markets of the World” paper by Nardin Baker and Robert Haugen, the differences in performance by low-volatility stocks and high-volatility stocks in developed and emerging equity markets worldwide were compared. The results revealed that stocks with low realized volatility exhibit higher future returns at lower risk than stocks with relatively higher realized volatility, thus contradicting the traditional inference that attributes higher returns to higher risks. Given this, we will take a look at some of the best safe stocks to consider.
A technical stock market chart. Photo by Energepic from Pexels
Our Methodology
In compiling a list of the 11 best safe stocks to buy according to hedge funds, we used Insider Monkey’s database of over 1,000 hedge funds, as of Q4 2024, and picked mega-cap stocks with positive five-year returns and next-year revenue growth. All of these factors are considered to ensure that the stocks selected yield low volatility and high safety. In addition, we also considered stocks that pay dividends to shareholders to ensure safety and reliability. The stocks are ranked in ascending order of the hedge funds having stakes in them.
At Insider Monkey, we are obsessed with 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
11. Johnson & Johnson (NYSE:JNJ)
Number of Hedge funds holding: 98
Forward Dividend: $5.20
Johnson & Johnson (NYSE:JNJ) is a global healthcare company focusing on innovative medicines and medical technologies. Headquartered in New Jersey, the company serves a wide clientele, including retailers, wholesalers, healthcare professionals, and hospitals. While the pharmaceuticals cover therapy areas including immune disorders, cancer, neurological disorders, and metabolic diseases, the medical devices are developed for use in cardiovascular, orthopedic, neurovascular care, general surgery, and vision care fields. Incepted in 1886, the company believes health is everything.
With visionary changes in progress, Johnson & Johnson (NYSE:JNJ) is taking the lead. Just recently, the management unveiled plans to invest over $55 billion in the United States over the upcoming four years in the areas of manufacturing, R&D, and technology. This 25% increase in investment, in contrast to the last four years, showcases that the company is not just an ordinary business.
Traditionally recognized as a consumer health company, Johnson & Johnson (NYSE:JNJ) has successfully transitioned to a healthcare company by incorporating segments like pharmaceuticals and MedTech. The company’s focus on developing next-gen medicines and devices is what we are excited about the most. As part of the investment strategy, the company is set to build four planned new manufacturing facilities.
Additionally, the acquisition of Intra-Cellular Therapies, which expands the giant’s industry-dominating portfolio in central nervous system disorders, has the potential to contribute more than $5 billion in peak-year sales. Johnson & Johnson (NYSE:JNJ) has also posted an increase in dividends for the 63rd consecutive year in its latest earnings report. This commitment to returning shareholder value is something that not many realize.
This 2025, the management expects the company to report higher growth levels, with major contributions from TREMFYA and other immunology assets. Having said that, the sales growth rate is projected to stand between 3.3% to 4.3%, with $92 billion as a midpoint. The urge to shift the treatment paradigm makes JNJ a compelling case and one of the best safe stocks according to hedge funds.
10. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge funds holding: 104
Forward Dividend: $3.96
Exxon Mobil Corporation (NYSE:XOM) is among the largest global energy providers and chemical manufacturers that develop and apply advanced technologies. The company explores, develops, and markets oil, gas, and petroleum products. With mainly three main segments: Upstream, Downstream, and Chemical, XOM is committed to delivering safe energy solutions while fulfilling its environmental responsibility.
Like any other enterprise, Exxon Mobil Corporation (NYSE:XOM) has faced various challenges over the last few years due to global economic and political uncertainties. And yet, it keeps going strong, exhibiting resilience, decent performance, and strategic market footing.
We expect natural gas to be a key driver of Exxon Mobil Corporation (NYSE:XOM). In the last quarter of 2024, the company showcased a 9.0% YoY surge in natural gas, producing 8,331 million cubic feet per day. While this was attributed to the hike in both price and demand, the upsurge is anticipated to be even more in the times to come, provided the power sector demand and LNG shipping capacity. This can further be reinforced by the claims by not only the U.S. Energy Information Administration (EIA) expecting a rise in LNG exports but also the International Energy Agency foreseeing a demand-supply imbalance translating to further upward pressure on prices.
That’s not it. With the global expansion of data centers, the company’s growth is just getting started. In this AI era, the total count of data centers is forecasted to increase to 6,111 this year and stand at 8378 in 2030. As data centers increase electricity consumption, this could mean a natural gas price push, and thus enhanced revenues for Exxon Mobil Corporation (NYSE:XOM).
According to analysts, Exxon Mobil Corporation (NYSE:XOM) will witness an upside of around 15%, which makes it one of the best safe stocks. Although not something remarkable, the poor expectations for the broader market by the Economy Forecast Agency make the XOM upside figure fairly attractive.
9. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge funds holding: 123
Forward Dividend: $5.60
JPMorgan Chase & Co. (NYSE:JPM) is a U.S.-based financial services company, serving individuals and institutions in over 100 countries. The core offerings of the company include investment banking, treasury and securities services, asset management, private banking, and home finance. With core values like delivering excellent customer service, upholding integrity, and supporting the growth of employees, JPM is one of the largest diversified banking firms.
Given the company’s first-quarter results, with revenues up around 8% year-over-year, most of the segments performed well amid greater macroeconomic uncertainties. Despite the Fed cutting interest rates, the bank showcased an 11% year-over-year rise in net interest income. Keeping this performance in consideration, we have a positive reason to believe that JPMorgan Chase & Co. (NYSE:JPM) will continue to not only survive but also succeed in this challenging environment.
The bank has already taken some protective measures against the trembling market by making significant provisions for credit losses. As the threat of global recession looms over the market, JPMorgan Chase & Co. (NYSE:JPM) has increased loan loss provisions to safeguard itself. Recognizing the problem is one thing, but preparing itself considering a wide range of scenarios is what has boosted investor confidence in JPM. Jamie Dimon, Chairman & Chief Executive Officer, made the following comment when reaffirming that the investments in banks, branches, technology, and AI are going to continue no matter what the circumstances:
“We are prepared for any environment and that’s so we can serve clients. That’s not for any other reason. So — but we have plenty of capital and plenty of liquidity to get through whatever the stormy seas are.”
Analysts have offered a one-year price target for JPMorgan Chase & Co. (NYSE:JPM) as high as $305.00 and as low as $251.00, with the current price average surpassing the previous average target of $273.40. Even if we consider the lowest price prediction, it still shows an upside of 7%. Thus, JPMorgan Chase & Co. (NYSE:JPM) is one of the best safe stocks to buy.
