In this article, we discuss the 14 safe stocks to buy for beginner investors. If you want to read about some more safe stocks, go directly to 5 Safe Stocks to Buy For Beginner Investors.
The collapse of the cryptocurrency market in the past few months has highlighted the perils of investing in speculative assets, especially to retail investors or beginners who had only just begun their investing careers and now face the daunting prospect of losing a vast portion of their wealth due to the slowing macro environment. In addition to crypto, other riskier growth stocks are also down. The NASDAQ Composite, made up primarily of tech-heavy firms, is down close to 30% year-to-date, as of November 28.
However, the shares of established tech giants like Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Meta Platforms, Inc. (NASDAQ:FB) have withstood the macro pressures better than feared. This resilience has underlined the importance of balancing portfolios with safe stocks that offer reliable dividend payouts and have pricing power to protect against inflation. Beginner investors, who have gained in prominence on Wall Street since the GameStop short squeeze saga of early 2021, should study the investing habits of titans like Warren Buffett and Charlie Munger, or elite hedge funds, to understand these concepts better.
Our Methodology
The companies that have established business models that have demonstrated historical resilience against inflationary headwinds were selected for the list. In order to provide readers with some context for their investment choices, the business fundamentals and analyst ratings for the stocks are also discussed. Data from around 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.
Photo by Austin Distel on Unsplash
Safe Stocks to Buy For Beginner Investors
14. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 59
The Coca-Cola Company (NYSE:KO) is a beverage company that manufactures, markets, and sells various non-alcoholic beverages worldwide. It is one of the best safe stocks to buy for beginners. On November 8, Coca-Cola raised its full-year profit forecast, as increasing prices help the company to keep up the fizz for its sodas. On November 4, Coca-Cola announced the launch of the iced tea category in Pakistan with its billion-dollar ready-to-drink brand, Fuze Tea. The firm has been paying a dividend to shareholders for the past sixty years consistently, an achievement that only a handful of companies can boast of on the US market.
On October 26, UBS analyst Peter Grom maintained a Buy rating on The Coca-Cola Company (NYSE:KO) stock and raised the price target to $68 from $63, noting that the company’s third quarter earnings beat was impressive as its organic growth more than offset currency headwinds.
At the end of the third quarter of 2022, 59 hedge funds in the database of Insider Monkey held stakes worth $25 billion in The Coca-Cola Company (NYSE:KO), compared to 60 in the preceding quarter worth $28.4 billion.
Just like Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Meta Platforms, Inc. (NASDAQ:FB), The Coca-Cola Company (NYSE:KO) is one of the safest stocks to buy for beginner investors according to hedge funds.
In its Q2 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and The Coca-Cola Company (NYSE:KO) was one of them. Here is what the fund said:
“Over the last year, we have repositioned our portfolio to navigate the course we see ahead. We added to more defensive areas of the portfolio like consumer staples (The Coca-Cola Company (NYSE:KO)). While the next month or two will likely prove choppy on account of the Omicron variant, we believe that Omicron, like Delta, represents a speed bump on the way to recovery rather than a true change in course. We see strong economic momentum continuing in 2022 and we expect interest rates to rise. After a decade of remarkably low rates, we would not be surprised if this change in direction is accompanied by some fits and starts in the markets. With our emphasis on pricing power, purposeful sector exposure, valuation discipline, and a strong dividend profile, we believe we are well-positioned for the year ahead.”
13. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 66
Chevron Corporation (NYSE:CVX) engages in integrated energy and chemical operations worldwide. On November 8, Chevron New Energies, a unit of Chevron, announced a collaboration with JERA, a Japanese energy giant, on the multiple lower carbon opportunities in the US and Asia Pacific region. The companies will collaborate on opportunities including carbon capture, production, storage and utilization. The firm is a reliable name in the energy sector with a dividend history stretching back thirty-five years.
On October 31, investment advisory Cowen maintained an Outperform rating on Chevron Corporation (NYSE:CVX) stock and raised the price target to $185 from $160. Analyst Charles Ryhee issued the ratings update.
At the end of the third quarter of 2022, 66 hedge funds in the database of Insider Monkey held stakes worth $27 billion in Chevron Corporation (NYSE:CVX), compared to 59 in the preceding quarter worth $26 billion.
In its Q1 2022 investor letter, Diamond Hill, an asset management firm, highlighted a few stocks and Chevron Corporation (NYSE:CVX) was one of them. Here is what the fund said:
“Other top contributors in Q1 included multinational energy company Chevron Corp. (NYSE:CVX). The company benefited from increased energy demand as COVID-related economic restrictions eased in tandem with concerns regarding supply interruptions related to Russia’s invasion of Ukraine.”
12. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 74
Micron Technology, Inc. (NASDAQ:MU) designs, manufactures and sells memory and storage products worldwide. It is one of the top safe stocks to buy for beginners. On November 1, Micron Technology unveiled that it has started shipping samples of its most advanced DRAM chip based on the LPDDR5X, low power double data rate 5X, to smartphone makers to test out. The new DRAM chip is made of 1-beta technology. The company operates in the semiconductor space that provides key tech to the gaming, automobile, defense, and other industries. It is expected that the demand for chips will continue to rise in the coming years.
On October 13, investment advisory Loop Capital initiated coverage of Micron Technology, Inc. (NASDAQ:MU) with a Buy rating and a $70 price target. Analyst Charles Park issued the ratings update.
At the end of the third quarter of 2022, 74 hedge funds in the database of Insider Monkey held stakes worth $2.5 billion in Micron Technology, Inc. (NASDAQ:MU), compared to 69 in the preceding quarter worth $2.2 billion.
In its Q2 2022 investor letter, Meridian Funds, an asset management firm, highlighted a few stocks and Micron Technology, Inc. (NASDAQ:MU) was one of them. Here is what the fund said:
“Micron Technology, Inc. (NASDAQ:MU) is a leader in the production of DRAM and NAND memory. We invested in the stock in the third quarter of 2019 during a cyclical downturn in the memory industry. Our rationale was that, while the memory industry is cyclical, we believed there are strong secular drivers in place that will lead to higher peaks and long-term growth. Our secular thesis is based on our conviction that the quest for ever-increasing compute speeds will increasingly rely on memory to solve bottlenecks and that increased memory content in nearly everything from mobile phones to automobiles will drive demand. Micron’s stock traded lower during the quarter due to macroeconomic concerns that led to lower earnings expectations. We increased our stake in the company, as we believe our secular thesis remains intact. We wanted to take advantage of what we view as temporary cyclical concerns that caused the stock to trade at less than 10x reasonable trough earnings per share (EPS) estimates and less than 7x recent peak EPS.”
11. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 75
Exxon Mobil Corporation (NYSE:XOM) explores for and produces crude oil and natural gas. On November 7, Exxon Mobil said that it is expected to lose $2 billion when it sells an oil field off the coast of California, where an oil spill halted operation in 2015. On November 4, Exxon Mobil noted that it will start conducting seismic surveys in two blocks southwest of Greece’s Peloponnese peninsula and the island of Crete in the coming days. Exxon has paid a growing dividend to shareholders for the past twenty years, attesting to the solidity of the business model of the firm.
On October 31, Truist analyst Neal Dingmann maintained a Hold rating on Exxon Mobil Corporation (NYSE:XOM) stock and raised the price target to $114 from $113, noting that the company’s Energy Products division posted 13% sequential growth in the third quarter.
Among the hedge funds being tracked by Insider Monkey, Lauderdale, Florida-based investment firm GQG Partners is a leading shareholder in Exxon Mobil Corporation (NYSE:XOM) with 33.9 million shares worth more than $2.96 billion.
In its Q2 2022 investor letter, First Eagle Investments, an asset management firm, highlighted a few stocks and Exxon Mobil Corporation (NYSE:XOM) was one of them. Here is what the fund said:
“Integrated oil and gas giant Exxon Mobil Corporation (NYSE:XOM) performed well in the second quarter as continued high prices for energy products supported the stock. As the largest refiner in the US, the company has benefitted from wide “crack spreads,” or the margin between the cost of crude oil and the petroleum products extracted from it. Exxon continues to invest in refining capacity in the US, which industrywide has been in steady decline since 2019. We are pleased that Exxon has been using its strong cash flows to reduce debt and to return cash to shareholders through dividends and stock repurchases.”
10. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 85
Johnson & Johnson (NYSE:JNJ) researches and develops, manufactures, and sells various products in the healthcare field. It is one of the premier safe stocks to buy for beginners. On October 17, Hetero said that it acquired a baby powder plant started in 2014 by Johnson & Johnson near Hyderabad, India. The firm has paid a growing dividend to shareholders for the past six decades and enjoys considerable pricing power and brand value in the healthcare space across the world.
On October 19, Bernstein analyst Lee Hambright maintained a Market Perform rating on Johnson & Johnson (NYSE:JNJ) stock and lowered the price target to $190 from $194, noting that the company reported strong third quarter results.
Among the hedge funds being tracked by Insider Monkey, Camas, Washington-based firm Fisher Asset Management is a leading shareholder in Johnson & Johnson (NYSE:JNJ) with 5.9 million shares worth more than $967.3 million.
In its Q2 2022 investor letter, Mayar Capital, an asset management firm, highlighted a few stocks and Johnson & Johnson (NYSE:JNJ) was one of them. Here is what the fund said:
“Johnson & Johnson (NYSE:JNJ) is currently our largest position and a long-standing holding. The majority of the group’s sales come from its collection of pharmaceutical franchises, but a large majority (~45%) comes from its collection of medical device businesses and its consumer brands.
Here’s how JNJ make and spends a dollar of revenues: As of 2021, about 55 cents of that dollar comes from its pharmaceutical sales – sales of drugs to pharmacies and distributors – while 30 cents come from the sale of medical devices, such as surgery equipment and orthopaedics. The rest of that dollar in sales comes from sales of JNJ’s consumer brands such as Listerine mouthwash, Nicorette nicotine tablets and Neutrogena cosmetics (…read more)
9. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 88
Tesla, Inc. (NASDAQ:TSLA) designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems. On November 8, Tesla announced that it has raised insurance incentives for car orders in China placed before November 30, but reduced them for orders made next month, to urge customers to make orders earlier. As the demand for EVs rises across the next few decades, Tesla, as one of the largest EV firms, is expected to be one of the biggest beneficiaries of this boom.
On October 24, Morgan Stanley analyst Adam Jonas maintained an Overweight rating on Tesla, Inc. (NASDAQ:TSLA) stock and lowered the price target to $330 from $350, noting that the company reported strong third quarter results.
At the end of the third quarter of 2022, 88 hedge funds in the database of Insider Monkey held stakes worth $7.4 billion in Tesla, Inc. (NASDAQ:TSLA), compared to 73 in the preceding quarter worth $7.2 billion.
In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Tesla, Inc. (NASDAQ:TSLA) was one of them. Here is what the fund said:
“In 2014, before we began to invest in Tesla (NASDAQ:TSLA), I called Roger to ask whether he thought Elon Musk’s electric car business would succeed. I did not believe that Roger, an owner of dealerships that sell cars powered by internal combustion engines (ICE) would likely have a favorable opinion of Tesla’s prospects. That was principally for two reasons:
First, automobile manufacturing and distribution is unusually complicated, capital intensive, and highly regulated, which makes profitability problematic;
second, cars with ICE motors require extensive annual maintenance, and dealer services revenues, not profits from automobile sales, are the most important contributor to profits of perpetual licensed ICE car dealerships.
Penske Automotive Group is principally an ICE car dealer. Since electric cars are powered by batteries and need little service, franchised dealerships are incented to sell ICE, not EV automobiles. Further, Roger had been a long-term director of General Motors. General Motors’ ICE automobile business would be disrupted if Tesla were successful. (click here to read more…)
8. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 89
NVIDIA Corporation (NASDAQ:NVDA) provides graphics, computing and networking solutions. It is one of the elite safe stocks to buy for beginners. On November 8, NVIDIA revealed that it is producing a processor, A800, or graphic processing unit, for China that conforms to new rules aimed at limiting the country’s access to artificial intelligence computing. The firm is a leader in the semiconductor sector and boasts of computing power that few other chip makers can match, especially in the gaming space.
On October 24, Barclays analyst Blayne Curtis maintained an Overweight rating on NVIDIA Corporation (NASDAQ:NVDA) stock and lowered the price target to $140 from $190, noting the material cuts through earnings in radio frequency, memory and PC.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in NVIDIA Corporation (NASDAQ:NVDA) with 19.3 million shares worth more than $2.3 billion.
In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and NVIDIA Corporation (NASDAQ:NVDA) was one of them. Here is what the fund said:
“At the company-specific level, there was a broad correction across the entire portfolio. While four of our holdings contributed to performance, the contribution to absolute returns was less than 100bps combined, as unfortunately none of them was large enough to move the needle. We had 16 investments detracting over 100bps each with NVIDIA (NASDAQ:NVDA), our second largest detractor, costing the Fund 254bps.
NVIDIA’s stock was hit even harder, down 44.4%, impacted by concerns over the health of the consumer, dramatic declines in crypto, and COVID-related lockdowns in China. Despite the sell-off and the increased near-term volatility in its gaming business, NVIDIA’s revenues grew 46% year-over-year with 48% operating margins, driven by continued strength in its data center business as companies across industries adopt AI and ML…(read more)
7. ServiceNow, Inc. (NYSE:NOW)
Number of Hedge Fund Holders: 103
ServiceNow, Inc. (NYSE:NOW) provides enterprise cloud computing solutions that define, structure, consolidate, manage, and automate services for enterprises worldwide. On October 5, ServiceNow unveiled that it would acquire Era Software, an observability and log management innovator. The company said that customers will be able to gather actionable insights that deliver value across the business within a single solution purpose-built for the era of digital business. As more businesses transition to digital, the cloud computing solutions the firm provides will witness an increase in demand as well, benefiting the stock over the next years.
On November 2, Macquarie analyst Sarah Hindlian-Bowler took over coverage of ServiceNow, Inc. (NYSE:NOW) stock with an Outperform rating and $500 price target, noting that the company continues to deliver a best-in-class platform for making work better.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Tiger Global Management LLC is a leading shareholder in ServiceNow, Inc. (NYSE:NOW) with 1.7 million shares worth more than $639.7 million.
In its Q2 2022 investor letter, Ensemble Capital, an asset management firm, highlighted a few stocks and ServiceNow, Inc. (NYSE:NOW) was one of them. Here is what the fund said:
“ServiceNow, Inc. (NYSE:NOW) is an enterprise software company that helps its corporate customers integrate all of their various software products into a unified platform. Their products are a key element in driving the digital transformation nearly every large company is undergoing. At the recent JP Morgan investor day, CEO Jamie Dimon explained that while the company could reduce expenses if needed should the economy slow, their spending on digital transformation would continue as this spending was critical to the company managing costs and maximizing revenue over time. As an example of this type of spending, Dimon specifically pointed to ServiceNow, calling out that the company’s products now oversaw the single largest collection of JP Morgan data and highlighted that working with them had saved JP Morgan $50 million over the past few years. (click here to read more…)
6. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 117
Salesforce, Inc. (NYSE:CRM) provides customer relationship management technology that brings companies and customers together worldwide. It is one of the major safe stocks to buy for beginners. On November 7, according to a survey conducted by the firm itself, businesses across industries and regions were seeing, on average, an estimated 25% savings on IT costs and a 26% increase in employee productivity using Salesforce products. The firm is a leader in the software space and is expected to continue to dominate in the sector over the next few years.
On October 20, Piper Sandler analyst Brent Bracelin maintained an Overweight rating on Salesforce, Inc. (NYSE:CRM) stock and lowered the price target to $175 from $200, noting that there are several factors that could further pressure billings, revenue, and free cash growth estimates into 2023, including elongating sales cycles.
At the end of the third quarter of 2022, 117 hedge funds in the database of Insider Monkey held stakes worth $8.2 billion in Salesforce, Inc. (NYSE:CRM), compared to 116 in the preceding quarter worth $7.9 billion.
In addition to Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Meta Platforms, Inc. (NASDAQ:FB), Salesforce, Inc. (NYSE:CRM) is one of the safest stocks to buy for beginner investors according to hedge funds.
In its Q3 2022 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Salesforce, Inc. (NYSE:CRM) was one of them. Here is what the fund said:
“Salesforce, Inc. (NYSE:CRM) has become a dominant global player in sales, customer service, commerce and marketing software over the past 20 years. The company earns 80% gross margins and grows 20% organically. Plus, virtually all of its revenue is recurring. We see Salesforce as a great business that we’ve admired from afar for a long time. More recently, the organization has made some changes at the top that prompted us to take a closer look at the stock. New CEO Bret Taylor and CFO Amy Weaver are bringing a culture of financial discipline. We believe this renewed focus on profitability and capital return, combined with Salesforce’s strong underlying business characteristics, will yield strong results. The current valuation of 3.9x next year’s revenues represents a significant discount compared to publicly traded peers and recent private market values in the software space that have similar growth profiles. We view this discount as an opportunity to invest in a great business at a good value.”
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Disclosure. None. 14 Safe Stocks to Buy For Beginner Investors is originally published on Insider Monkey.