In this article, we will take a look at the 5 best low risk stocks to buy in 2023. To read our analysis of the recent market trends and market activity, you can go to the 12 Best Low Risk Stocks to Buy in 2023.
5. Zoetis Inc. (NYSE:ZTS)
Number of Hedge Fund Holders: 65
Beta Value: 0.83
Parsippany, New Jersey-based Zoetis Inc. (NYSE:ZTS) is a leading animal health company with a portfolio and pipeline of medicines, vaccines, diagnostics, and technologies offered in over 100 countries. Formerly a subsidiary of Pfizer Inc. (NYSE:PFE), the company became independent through a spinoff in 2013.
Zoetis Inc. (NYSE:ZTS) has been continuously making efforts to increase its product franchises in major markets. During the third quarter, the company received approvals for Simparica Trio, the company’s triple combination oral parasiticide for dogs, in Australia and Canada. The company launched Librela (bedinvetmab injection for osteoarthritis pain) and Apoquel Chewable (oclacitinib chewable tablet) in the U.S. in October.
Zoetis Inc. (NYSE:ZTS) has paid regular dividends since its spinoff from Pfizer Inc. (NYSE:PFE) with consecutive dividend increases for several years. The board of directors of the company increased the dividend rate by 15% in December 2022 to bring the quarterly dividend payment to $0.375. Its dividends have grown at a CAGR of 22.63% during the last 10 years.
4. CVS Health Corporation (NYSE:CVS)
Number of Hedge Fund Holders: 66
Beta Value: 0.56
CVS Health Corporation (NYSE:CVS) is a health solutions company based in Woonsocket, Rhode Island and a history dating back to 1963. It has more than 9,900 retail locations, nearly 1,100 walk-in medical clinics, a leading pharmacy benefits manager with approximately 110 million plan members, and more than 68,000 retail network pharmacies under its pharmacy services.
On November 1, CVS Health Corporation (NYSE:CVS) released its financial results for Q3 2023. Its revenues increased by 11% y-o-y to $89.8 billion, while it generated a net income of $2.3 billion, compared to a net loss of $3.4 billion last year. CVS Health Corporation (NYSE:CVS) also declared a dividend of $0.605 per share for the quarter.
Following the earnings release, Morgan Stanley analyst Erin Wright lowered the price target on CVS Health Corporation (NYSE:CVS) shares to $100 from $110 but maintained an ‘Overweight’ rating. The price target represents a potential upside of 43.78% based on the share price on November 8.
This is what Harris Associates, advisor to Oakmark Funds, had to say about CVS Health Corporation (NYSE:CVS) in Oakmark Fund’s Q3 2023 investor letter:
“Managed care and pharmacy benefits management have proven to be good businesses over time, characterized by healthy underlying growth and excellent free cash flow generation. CVS has underperformed the S&P 500 by more than 40 percentage points over the past 12 months, impacted by a cloud of company specific and legislative concerns. While we are not dismissive of these potential risks and headwinds, we believe the market has become overly pessimistic. This created an attractive opportunity to invest in what we view as a durable, competitively advantaged and well-managed enterprise at a high-single-digit multiple of earnings.”
3. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 66
Beta Value: 0.37
Based in New Jersey, Bristol-Myers Squibb Company (NYSE:BMY) is a biotechnology company focused on the discovery, development, and delivery of innovative medicines for serious diseases across oncology, hematology, immunology, cardiovascular disease, and fibrosis.
On October 8, Bristol-Myers Squibb Company (NYSE:BMY) announced that it had entered into a definitive merger agreement to acquire Mirati Therapeutics, Inc. (NASDAQ:MRTX), in an all-cash transaction which values the target company at $4.8 billion. The acquisition is expected to strengthen and diversify the oncology portfolio of the company.
After a quarterly performance report released on October 26 which showed an in-line topline and an adjusted EPS of $2.00 which beat consensus by $0.23, Goldman Sachs analyst Chris Shibutani lowered the price target on Bristol-Myers Squibb Company (NYSE:BMY) shares to $69 from $81s, while maintaining a ‘Buy’ rating for the shares.
2. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 73
Beta Value: 0.61
Founded in 1849, New York-based, Pfizer Inc. (NYSE:PFE) is a leading research-based biopharmaceutical company. Its product portfolio and pipeline includes several pharmaceutical therapies for primary care, specialty care, and oncology, including mRNA-based COVID-19 vaccine – COMIRNATY, and covid-19 treatment – PAXLOVID.
On October 31, Pfizer Inc. (NYSE:PFE) released its financial results for the third quarter of 2023. Its revenues declined by 42% y-o-y to $13.2 billion, while it reported a net loss of $2.4 billion. The drastic drop resulted from a decline in the company’s revenue from Comirnaty and Paxlovid. On the other hand, the revenues for non-covid products of the company increased 10% operationally.
As of Q2 2023, 73 of the 910 hedge funds tracked by Insider Monkey were long Pfizer Inc. (NYSE:PFE), holding shares worth $1.5 billion. Prominent hedge funds such as Citadel Investment Group, Renaissance Technologies, and Diamond Hill Capital, among others, held the most shares of the company.
1. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 78
Beta Value: 0.37
Merck & Co., Inc. (NYSE:MRK) is a biopharmaceutical company with a focus on delivering solutions for oncology, vaccines, infectious diseases, Cardio-metabolic disorders, and Discovery & development. Its product pipeline comprises 83 programs in Phase 2, 30 programs in Phase 3, and 3 programs Under Review, including COVID19 vaccines.
On November 9, Deutsche Bank analyst James Shin initiated coverage of Merck & Co., Inc. (NYSE:MRK) shares with a target price of $115 with a ‘Buy’ rating for the stock. Earlier in November, the company announced that it had received FDA approval for KEYTRUDA, in combination with gemcitabine and cisplatin, for the treatment of patients with locally advanced unresectable or metastatic biliary tract cancer.
Merck & Co., Inc. (NYSE:MRK) is the best low risk stock to buy in 2023 based on hedge fund sentiment and low beta value according to the methodology used by us for preparing this list. Its shares were held by 78 hedge funds with total value of $2.7 billion, as of June 30. Cliff Asness’ AQR Capital Management was the largest hedge fund shareholder with ownership of 2.9 million shares valued at $332 million.
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