12 Safest Stocks To Invest In

In this article, we discuss the 12 safest stocks to invest in.

The stock market outlook for 2023 is rather dismal as per the majority of Wall Street analysts. According to Deutsche Bank, global stocks are forecasted to plummet sharply by mid-2023 as a recession threatens to hit the United States. David Folkerts-Landau, chief economist at Deutsche Bank, wrote in a note: 

“We see major stock markets plunging 25% from levels somewhat above today’s when the US recession hits, but then recovering fully by year-end 2023, assuming the recession lasts only several quarters.” 

In the United States, analysts forecast the S&P 500 to rally to 4,500 in the first half of 2023, then a selloff of more than 25% in the third quarter, before recovering back to 4,500 by the end of the year. In an effort to control the 40-year high inflation, the Federal Reserve will continue to raise rates, albeit at a slower pace than 2022, which will eventually tip the economy towards a full blown recession in 2023. 

While some money managers are predicting a recession, others believe that the global economy will be hit with stagflation instead, which is a period of high inflation and high unemployment. Whatever may be the fate of the US economy next year, it is important for investors to safeguard their money and construct a safe equity portfolio, consisting of defensive names like Philip Morris International Inc. (NYSE:PM), ConocoPhillips (NYSE:COP), and Target Corporation (NYSE:TGT). 

Our Methodology 

The following stocks are defensive, enjoy strong market visibility, display solid dividend profiles, and have a prominent history of surviving market downturns. This qualifies the following companies as safe investments in a volatile economic environment. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022. 

Safest Stocks To Invest In

12. Anheuser-Busch InBev SA/NV (NYSE:BUD)

Number of Hedge Fund Holders: 14

Anheuser-Busch InBev SA/NV (NYSE:BUD) is a Belgian company engaged in the production, distribution, and commercialization of alcoholic beverages and soft drinks worldwide. It offers a portfolio of approximately 500 beer brands, including Budweiser, Corona, and Stella Artois. For full-year 2022, Anheuser-Busch InBev SA/NV expects its FY22 EBITDA to grow between 6%-8% and the revenue to trail ahead of EBITDA from a solid combination of volume and price. 

On November 28, JPMorgan analyst Jared Dinges upgraded Anheuser-Busch InBev SA/NV to Overweight from Underweight with a price target of $70, up from $45. The analyst sees “scope for earnings outperformance” and said the company’s “rapidly deleveraging balance sheet provides optionality.” Anheuser-Busch InBev SA/NV’s transition to a “higher-quality top-line growth story is well underway,” the analyst told investors in a research note. He views AB InBev’s valuation as attractive at present levels.

According to Insider Monkey’s data, 14 hedge funds were long Anheuser-Busch InBev SA/NV at the end of Q3 2022, with collective stakes worth $740.2 million. Ken Fisher’s Fisher Asset Management is the leading position holder in the company, with 9.2 million shares valued at approximately $419 million. 

Like Philip Morris International Inc., ConocoPhillips, and Target Corporation, Anheuser-Busch InBev SA/NV is one of the safest stocks to monitor. 

Here is what ClearBridge Investments Large Cap Growth Strategy has to say about Anheuser-Busch InBev SA/NV in its Q4 2021 investor letter:

“To make room for these new names and optimize the growth profile of the Strategy, we exited two additional positions during the quarter. We sold out of Anheuser-Busch InBev as we see too much work ahead for the world’s largest beer maker to re-ignite sales growth post COVID-19. While the company should benefit from a recovery in the on-premise channel, individual country complexities, the hedging of raw materials, and senior management turnover leave us more confident in the Strategy’s other reopening-related holdings.”

11. Unilever PLC (NYSE:UL)

Number of Hedge Fund Holders: 21

Unilever PLC (NYSE:UL) is a London-based fast moving consumer goods company. It operates through Beauty & Personal Care, Foods & Refreshment, and Home Care segments. Unilever PLC is one of the safest stocks to add to a portfolio. On November 16, the company declared a EUR 0.4268 per share quarterly dividend, which is payable on December 9 to shareholders of record on November 18. 

On November 1, Morgan Stanley analyst Pinar Ergun raised the price target on Unilever PLC to $46 from $42.75 and kept an Equal Weight rating on the shares.

According to Insider Monkey’s third quarter database, 21 hedge funds were bullish on Unilever PLC, with combined stakes worth $708 million. Tom Russo’s Gardner Russo & Gardner held a prominent stake in the company, comprising 6.40 million shares worth approximately $281 million. 

Here is what Mayar Capital specifically said about Unilever PLC in its Q2 2022 investor letter:

“In 1895 the Lever brothers created a new brand of hand soap. Inspired by the growing demand for hygiene products, the Lifebuoy brand of soaps was launched to ‘make health infectious’. 128 years later the Lifebuoy brand continues as a leading soap brand – albeit without the coal tar-derived ingredients list. In fact, the market research firm Kantar ranked Lifebuoy as the global #3 most chosen FMCG brand in 2020, just below Coca-Cola (KO) and Colgate (CL) – an astonishing fact given the age of the brand. While the brand is largely absent from shelves here in the UK, it is a juggernaut in Asian markets, and is the #1 brand in India.

There are two observations about the Lifebuoy story which tell us a lot about Unilever PLC, which is currently our largest holding in the Fund.

The first is the enduring power of brands in the consumer goods market. According to Kantar’s list of most chosen brands, the top 20 global marques have an average age of 116 years, with over half being founded in the 19th century. Fashions come and go, but there is something special about low-cost consumable goods that advantages strong, time-worn brand names…” (Click here to view full text)

10. Dollar Tree, Inc. (NASDAQ:DLTR)

Number of Hedge Fund Holders: 37

Dollar Tree, Inc. (NASDAQ:DLTR) is an American company that operates a network of discount variety retail stores. It operates in two segments, Dollar Tree and Family Dollar. On November 22, Dollar Tree, Inc. posted a Q3 GAAP EPS of $1.20 and a revenue of $6.94 billion, outperforming Wall Street estimates by $0.03 and $100 million, respectively. Consolidated net sales for the full year are now expected to range from $28.14 billion to $28.28 billion, compared to the previous outlook of $27.85 billion to $28.10 billion and a consensus of $28.05 billion. 

On November 23, Deutsche Bank analyst Krisztina Katai raised the price target on Dollar Tree, Inc. to $194 from $163 and kept a Buy rating on the shares. The analyst is “encouraged” by Dollar Tree, Inc.’s sales progress in Q3 2022. Both Dollar Tree banners reported sales upside, with same-store sales improving as the quarter progressed, resulting in the lifted revenue guidance for 2022, the analyst told investors in a research note.

According to Insider Monkey’s third quarter database, 37 hedge funds were bullish on Dollar Tree, Inc., compared to 38 funds in the earlier quarter. Paul Hilal’s Mantle Ridge LP is the biggest position holder in the company, with 11.3 million shares worth $1.5 billion. 

Here is what Madison Funds specifically said about Dollar Tree, Inc. in its Q2 2022 investor letter:

“Dollar Tree, Inc. reported strong results on the heels of rolling out the $1.25 price point initiative at all Dollar Tree stores nationwide. Furthermore, they announced several executive leadership changes, undoubtedly catalyzed by new Executive Chairman Richard Dreiling. We remain encouraged by the progress to date and are excited to see what the new team can do at Dollar Tree over the coming years.”

9. Monster Beverage Corporation (NASDAQ:MNST)

Number of Hedge Fund Holders: 39

Monster Beverage Corporation (NASDAQ:MNST) is one of the safest stocks to invest in. The California-based company is engaged in the development, marketing, and distribution of energy drink beverages and concentrates in the United States and internationally. The company operates through three segments – Monster Energy Drinks, Strategic Brands, and Other. Monster Beverage Corporation announced on November 3 that its board of directors have authorized a new share repurchase program of an additional $500 million of the outstanding common stock.

On November 29, Argus analyst John Staszak raised the price target on Monster Beverage Corporation to $118 from $113 and kept a Buy rating on the shares. The analyst contended that shares remain attractive despite investor concerns about rising input costs and freight rates. He raised his FY22 EPS view by 4c to $2.56 and his FY23 view by 1c to $3.16, both of which are ahead of consensus.

According to Insider Monkey’s third quarter data, 39 hedge funds were bullish on Monster Beverage Corporation, compared to 46 funds in the last quarter. Neal C. Bradsher’s Broadwood Capital is the leading stakeholder of the company, with 4.65 million shares worth $405 million. 

Here is what Carillon Tower Advisers specifically said about Monster Beverage Corporation in its Q2 2022 investor letter:

“Monster Beverage Corporation develops and sells energy drinks and concentrates. The company’s shares outperformed, driven by an impressive earnings report highlighted by better than expected organic growth. Management also gave guidance that indicated a potential bottom in gross margins, as well as upcoming price increases that helped give investors confidence in its growth outlook.”

8. Church & Dwight Co., Inc. (NYSE:CHD)

Number of Hedge Fund Holders: 40

Church & Dwight Co., Inc. is a New Jersey-based company that develops, manufactures, and markets household, personal care, and specialty products. It operates through three segments – Consumer Domestic, Consumer International, and Specialty Products Division. Church & Dwight paid a $0.2625 per share quarterly dividend on December 1. It is one of the safest stocks to monitor. 

On November 7, Argus analyst Kristina Ruggeri upgraded Church & Dwight Co., Inc. to Buy from Hold with a $78 price target. The analyst is optimistic that the company has made progress in resolving its supply chain and production constraints and expects its fill rates to normalize by the end of the year. Church & Dwight Co., Inc. has also seen market share gains for its lower-priced “value” products as consumers trade down from more expensive products in an inflationary environment. 

Among the hedge funds tracked by Insider Monkey, 40 funds reported owning stakes worth $1.28 billion in Church & Dwight Co., Inc. at the end of Q3 2022, compared to 32 funds in the prior quarter worth $1.33 billion. Terry Smith’s Fundsmith LLP is the largest stakeholder of the company, with 8.45 million shares valued at $604.2 million. 

Here is what LRT Capital Management has to say about Church & Dwight Co., Inc. in its Q1 2021 investor letter:

“Church & Dwight is another classic “defensive” company – it sells cleaning products (Arm & Hammer, OxiClean), toothache medication (Orajel), and condoms (Trojans). For those that fail to purchase Trojans, the company also offers pregnancy test kits (First Response). Joking aside, the company’s revenue has historically grown by GDP+ rates organically. Combined with thoughtful acquisitions, 10-year revenue growth has averaged +6.6%, which has translated to EPS growth of over +11% per year. The company has accomplished all this with ½ of the overall volatility of the stock market. The company reported Q4 2020 earnings on January 29th, beating both top (revenue +14% YoY) and bottom line measures (EPS $0.59 vs $0.51 expected). We view the shares as reasonably valued at 26x forward earnings given the high level of predictability of the company’s earnings and low financial leverage. Shares are down 0.5% year-to-date.”

7. Constellation Brands, Inc. (NYSE:STZ)

Number of Hedge Fund Holders: 43

Constellation Brands, Inc. (NYSE:STZ) is a New York-based company that produces, imports, markets, and sells beer, wine, and spirits in the United States, Canada, Mexico, New Zealand, and Italy. Constellation Brands, Inc. is one of the safest stocks to consider buying. 

Argus analyst John Staszak on November 28 raised the price target on Constellation Brands, Inc. to $295 from $270 and maintained a Buy rating on the shares. The analyst expects Constellation Brands, Inc. to emerge from the pandemic in a position of strength as beer shipments remain strong and the company overcomes headwinds created by the sale of certain products to Gallo, the analyst wrote in a research note.

Among the hedge funds tracked by Insider Monkey, Constellation Brands, Inc. was part of 43 public stock portfolios at the end of September 2022, compared to 44 in the earlier quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the largest stakeholder of the company, with 1.3 million shares worth $313.5 million. 

6. Valero Energy Corporation (NYSE:VLO)

Number of Hedge Fund Holders: 47

Valero Energy Corporation (NYSE:VLO) is a Texas-based company that manufactures, markets, and sells transportation fuels and petrochemical products in the United States, Canada, the United Kingdom, Ireland, and internationally. The company operates through three segments – Refining, Renewable Diesel, and Ethanol. On October 26, Valero Energy Corporation declared a quarterly dividend of $0.98 per share, in line with previous. The dividend is distributable on December 8, to shareholders of record on November 17. 

On November 9, Piper Sandler analyst Ryan Todd raised the price target on Valero Energy Corporation to $177 from $147 and kept an Overweight rating on the shares. Despite investor concerns of a “one off” uplift to refining margins in 2022, recent earnings results from the independent refiners and “persistent systemic tightness have made it abundantly clear that global tightness in refined product markets is likely to persist for quite some time,” the analyst told investors. He raised his 2023 outlook for refining margins to within 10% of 2022 levels.

According to Insider Monkey’s Q3 data, 47 hedge funds were long Valero Energy Corporation, compared to 43 funds in the last quarter. Israel Englander’s Millennium Management is a prominent stakeholder of the company, with 1.8 million shares worth $194.2 million. 

In addition to Philip Morris International Inc., ConocoPhillips, and Target Corporation, Valero Energy Corporation is one of the safest stocks favored by elite investors.

5. Target Corporation (NYSE:TGT)

Number of Hedge Fund Holders: 52

Target Corporation, an American general merchandise retailer, is one of the top picks for a safe stock portfolio. Target Corporation is set to pay a $1.08 per share quarterly dividend on December 10, to shareholders of record as of November 16. Target Corporation’s dividend yield on December 1 came in at 2.61%. 

On November 21, Evercore ISI analyst Greg Melich reiterated an In Line rating on Target Corporation but trimmed the firm’s price target on the shares to $155 from $165. Target Corporation is “a share gaining multichannel retailer” and he is hopeful the company’s Q3 miss and guide-down “cleared the decks” and allowed for higher confidence that inventories will be back on track by January, the analyst told investors.

According to Insider Monkey’s Q3 database, 52 hedge funds were long Target Corporation, compared to 46 funds in the prior quarter. Ken Fisher’s Fisher Asset Management held the biggest stake in the company, comprising 4.8 million shares worth $711.3 million. 

Here is what Carillon Tower Advisers specifically said about Target Corporation in its Q2 2022 investor letter:

“Target Corporation faced its worst day in decades after trimming its profit forecast for the year due to higher costs. While many of the cost pressures are likely to persist in the near term, the company also struggled with a shift in consumer spending, which resulted in inventory write-downs.”

4. Dollar General Corporation (NYSE:DG)

Number of Hedge Fund Holders: 59

Dollar General Corporation (NYSE:DG) is an American discount retailer that provides a range of merchandise products. In times of economic downturns, discount stores tend to see higher traffic and improved returns. On December 1, Dollar General Corporation declared a quarterly dividend of $0.55 per share, in line with previous. The dividend is payable on January 17, 2023 to shareholders of record on January 3. 

On November 29, Deutsche Bank analyst Krisztina Katai raised the price target on Dollar General Corporation to $293 from $265 and maintained a Buy rating on the shares. The analyst told investors to stick with the “winners” in retail.

According to Insider Monkey’s third quarter database, 59 hedge funds were long Dollar General Corporation, compared to 51 funds in the earlier quarter. Andreas Halvorsen’s Viking Global held the biggest position in the company, comprising 2.4 million shares worth $582 million. 

Here is what Aristotle Capital specifically said about Dollar General Corporation in its Q2 2022 investor letter:

“Dollar General Corporation contributed to performance in the second quarter following the report of first quarter earnings that were above expectations. Strength in the second quarter was driven by better-than-expected sales of consumable items. Guidance for the remainder of the year was increased. In addition to solid earnings, forecasts for the increasing expectations of a recession drove positive sentiment towards consumer discretionary companies with more predictable revenue like dollar stores.”

3. Philip Morris International Inc. (NYSE:PM)

Number of Hedge Fund Holders: 63

Philip Morris International Inc., an American multinational tobacco company, is one of the safest stocks to monitor. Tobacco and alcohol demand has historically risen during times of economic hardships, as people turn towards substances to deal with the pressure of unemployment and rising inflation. On November 6, the company announced that activist fund Elliott Management put its support behind Philip Morris International Inc.’s $15.7 billion acquisition offer for Swedish Match, allowing the deal to conclude. 

On November 15, Argus analyst David Coleman upgraded Philip Morris International Inc. to Buy from Hold with a $110 price target. The company is working to become a primarily smoke-free business by 2025, the analyst told investors in a research note. He noted that the new reduced-risk products presently account for 30% of Philip Morris International Inc.’s net sales, and the company has also acquired the rights to commercialize IQOS in the U.S. starting on April 30, 2024. The management has raised its dividend as well, which signals higher confidence in the future outlook, the analyst wrote in a research note.

Among the hedge funds tracked by Insider Monkey, 63 funds were bullish on Philip Morris International Inc. at the end of Q3 2022, compared to 56 funds in the prior quarter. Rajiv Jain’s GQG Partners is the leading stakeholder of the company, with 17.4 million shares worth $1.4 billion. 

Here is what Coho Relative Value Equity Fund has to say about Philip Morris International Inc. in its Q3 2022 investor letter:

“Coho is not immune to the earnings pressure exerted by a strong USD, although the portfolio on the whole has modestly less foreign revenue exposure relative to the S&P 500 Index. The two most impacted Coho stocks includes Philip Morris International, which essentially derives all of its revenues outside the U.S. Harkening back to Table 1, the decline in Philip Morris earnings for 2022 versus the reported earnings in 2021 is entirely related to the strengthening dollar. On a constant currency basis, Philip Morris’ earnings in 2022 would be up mid to high single digits.”

2. American Tower Corporation (NYSE:AMT)

Number of Hedge Fund Holders: 62

American Tower Corporation (NYSE:AMT) is one of the largest global REITs that owns, operates, and develops multi-tenant communications real estate in several countries. The company raised its FY 2022 outlook, and now expects total property revenue of $10.395 billion to $10.485 billion, up from the prior outlook of $10.28 billion to $10.46 billion. American Tower Corporation is one of the safest stocks to consider. 

On November 23, Raymond James analyst Ric Prentiss raised the price target on American Tower Corporation to $233 from $219 and reiterated an Outperform rating on the shares. The analyst believes that a longer-term debt raise at American Tower Corporation would come in the 6% zone, which is higher than his last assumption, but is encouraged by the possibility of a stabilization in interest rates that could result in ongoing tower stock outperformance.

According to Insider Monkey’s Q3 data, 62 hedge funds were bullish on American Tower Corporation, compared to 52 funds in the prior quarter. Charles Akre’s Akre Capital Management is the biggest position holder in the company, with approximately 7 million shares worth $1.5 billion. 

Here is what Baron Real Estate Fund has to say about American Tower Corporation in its Q2 2022 investor letter:

“American Tower is a leading global tower company with 220,000 communication sites globally and over 40,000 in the U.S. We added to our position during the market dislocation and as it became increasingly clear that the company would put permanent equity financing in place at better-than-expected terms for its previously announced acquisition of CoreSite (thereby removing the “equity overhang”).

In addition, the company stepped back from a large potential deal in Europe, which would have required significant incremental funding, due to unfavorable contract terms and price. This decision further reinforced our confidence in management’s capital allocation discipline knowing that these were highly sought-after assets.”

1. ConocoPhillips (NYSE:COP)

Number of Hedge Fund Holders: 64

ConocoPhillips is an American energy company that produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids worldwide. On November 29, ConocoPhillips and QatarEnergy announced agreements to supply 2 million metric tons of liquefied natural gas per year to Germany for 15 years starting in 2026, as Germany seeks to fulfill its future gas needs following the conclusion of its energy relationship with Russia.

On November 29, Citi analyst Alastair Syme raised the price target on ConocoPhillips to $160 from $132 and kept a Buy rating on the shares. The market rotation into energy equities has “further to run, even though names in our US coverage already sit at all-time highs,” the analyst told investors. History suggests that energy equities usually perform well in an earnings recession, which is Citi’s base-case for 2023, wrote the analyst.

According to Insider Monkey’s data, ConocoPhillips was part of 64 hedge fund portfolios at the end of the third quarter of 2022, compared to 71 funds in the prior quarter. Ric Dillon’s Diamond Hill Capital is a significant position holder in the company, with 6.3 million shares worth $646.7 million. It is one of the safest stocks preferred by elite investors. 

ClearBridge Investments made the following comment about ConocoPhillips in its Q3 2022 investor letter:

“ConocoPhillips handily outperformed the energy sector, which led the value benchmark. Its exposure to natural gas helped the stock perform more in line with natural gas E&Ps, which led the sector due to the European energy crisis and U.S. shale gas being considered a secure long-term source of liquid natural gas. In addition to COP’s low-cost resource base, conservative balance sheet and experienced management team, we appreciate its strong focus on ESG measures, which we believe is a good indicator of the quality of a company’s business model and management team.

Specifically, we appreciate solid governance practices with compensation metrics emphasizing ROCE and relative total shareholder return, the board’s effective oversight of management as well as the company’s methane flaring leadership. COP is investing in field electrification and carbon capture across its portfolio, with ambitions to deliver oil production with a CO2 intensity of sub-5 kg/BOE, which would be one of the lowest emission sources of supply in the world.”

You can also take a look at 10 Best Stocks in Each Sector and 12 Best Defensive Stocks To Buy Now. 

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This article is originally published at Insider Monkey.