In this article, we take a look at 5 safe stocks to buy according to hedge funds. If you want to read our detailed analysis of safe stocks, go directly to see the 11 Safe Stocks To Buy According To Hedge Funds.
05. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders as of Q2, 2022: 71
AbbVie Inc. (NYSE:ABBV) is a Chicago, Illinois-based pharmaceutical company that came into being following its spin-off from Abbott Laboratories (NYSE:ABT) in 2013. AbbVie Inc. (NYSE:ABBV) is a dividend king, given that it has increased its annual dividend for 50 consecutive years. With a forward dividend yield of 3.67% as of October 28, AbbVie Inc. (NYSE:ABBV) also has a higher yield than some comparable companies in the pharmaceutical sector. On October 13, Morgan Stanley analyst Terence Flynn kept his Overweight rating and $185 price target on AbbVie Inc. (NYSE:ABBV) while naming the stock his “Catalyst Driven Idea”.
According to Insider Monkey’s data, 71 hedge funds were bullish on AbbVie Inc. (NYSE:ABBV) at the end of the second quarter of 2022, compared to 76 funds in the prior quarter. Rajiv Jain’s GQG Partners is the company’s largest stakeholder, with 9.82 million shares worth $1.2 billion.
Here is what Baron Funds specifically said about AbbVie Inc. (NYSE:ABBV) in its Q3 2022 investor letter:
“AbbVie Inc. (NYSE:ABBV) is a drug developer best known for Humira, an immunosuppressant that is the best selling drug of all time. Given outsized key product risk (patent cliff and generic launches beginning in 2023), AbbVie has broadened its pipeline, highlighted by its Allergan acquisition. Shares fell on results that missed consensus and indications that legacy franchises were outperforming newer product launches, calling into question AbbVie’s long-term strategy. With promising assets in the pipeline and its robust cash flow profile, we believe AbbVie will grow well into the future.”
04. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders as of Q2, 2022: 83
Johnson & Johnson (NYSE:JNJ) specializes in medical devices, pharmaceuticals, consumer products, and other packaged goods. Unlike the S&P 500, which has fallen 20.6% year to date, Johnson & Johnson (NYSE:JNJ) shares are actually up 1.37% as of October 28. Despite macro pressures such as a strong U.S. dollar which makes Johnson & Johnson (NYSE:JNJ) international earnings less in dollar terms, the company reported strong third-quarter results with 8.2% organic sales growth. In terms of its EPS, Johnson & Johnson (NYSE:JNJ) had a relatively strong Q3 given adjusted EPS of $2.55 versus the consensus of $2.48. Sales for the period were $23.8 billion versus the consensus of $23.34 billion.
On October 19, Bernstein analyst Lee Hambright lowered his price target on Johnson & Johnson (NYSE:JNJ) to $190 from $194 and kept a Market Perform rating on the shares. Johnson & Johnson (NYSE:JNJ) is a dividend king, given it has increased its dividend for 60 consecutive years.
As of the close of Q2 2022, 83 hedge funds tracked by Insider Monkey owned stakes in Johnson & Johnson (NYSE:JNJ), with a total value of over $6.7 billion. In the previous quarter, 83 hedge funds owned stakes in the pharmaceutical company as well, worth over $7.4 billion.
Distillate Capital Partners LLC mentioned Johnson & Johnson (NYSE:JNJ) in its Q2 2022 investor letter. Here is what the firm has to say:
“Johnson & Johnson was among the 2 largest trims at around 1% each. Each stock was up 1% in the quarter compared to the 16% price decline for the S&P 500 and the positions were reduced as the valuations became somewhat less appealing, though still attractive enough to warrant inclusion.”
03. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders as of Q2, 2022: 128
Apple Inc. (NASDAQ:AAPL) is one of the most innovative companies in the world and has a history of releasing groundbreaking products that have revolutionized the tech industry. On October 28, Morgan Stanley analyst Erik Woodring, who kept an Overweight rating and $177 price target on Apple shares, said Apple Inc. (NASDAQ:AAPL) September quarter beat and “in-line to above Street” December quarter guidance was “better than feared” and “illustrates the consistency of Apple’s ecosystem.”
Like other tech companies, Apple Inc. (NASDAQ:AAPL) faces headwinds, expecting the strong dollar to negatively affect the company’s international earnings in fiscal Q1. For Q4, however, Apple Inc. (NASDAQ:AAPL) performed pretty well. For the quarter, the company reported EPS of $1.29 on sales of $90.1 billion versus the consensus of $1.17 on sales of $88.9 billion for the fourth quarter. Apple Inc. (NASDAQ:AAPL) also returned over $29 billion in capital to shareholders.
According to hedge funds, the stock is ranked high among the safe stocks to buy. At the end of Q2 2022, 128 hedge funds were bullish on Apple Inc. (NASDAQ:AAPL) and held stakes worth $143 billion in the company. Of those, Berkshire Hathaway was the top shareholder in the company and held stakes worth $122 billion.
Here is what Wedgewood Partners had to say about Apple Inc. (NASDAQ:AAPL) in its third-quarter 2022 investor letter:
“Apple Inc. (NASDAQ:AAPL) grew revenues +5% (foreign exchange adjusted and excluding Russia) driven by record iPhone revenues that were up about +3% on an exceptional year ago comparison of +50%. Apple’s installed base is over 1.8 billion devices which helps drive a software and services business that has generated almost $80 billion of revenue over the past 4 quarters. As we have highlighted in the past, Apple’s relentless focus on the development and integration between hardware (especially ICs) as well as software, continues to add significant value for customers of its products and services. We expect this favorable competitive dynamic to continue for the foreseeable future.”
02. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders as of Q2, 2022: 166
Visa Inc. is a leading payment solution provider, with products used by consumers, businesses, and governments worldwide. In terms of its fiscal fourth quarter, payments at Visa Inc. (NYSE:V) grew 10% and processed transactions rose 12%. Sales rose to $7.79 billion from $6.56 billion and the company reported adjusted earnings of $1.93 per share, up 19% year over year. Given its earnings potential, Visa Inc. (NYSE:V) dividend is very secure. As of October 28, Visa Inc. (NYSE:V) shares yield 0.88%. The stock is currently trading at a PE multiple of 27x. Visa Inc. (NYSE:V) has a trailing twelve-month operating margin of 67.48% and free cash flows of $16 billion.
At the close of Q2 2022, 166 hedge funds were long Visa Inc. (NYSE:V) and held stakes worth $24 billion in the company. This is compared to 159 positions in the previous quarter with stakes of $28 billion. As of June 30, TCI Fund Management is the top shareholder in Visa Inc. (NYSE:V) and has stakes worth $3.92 billion in the company.
Here is what RiverPark Large Growth Fund has to say about Visa Inc. (NYSE:V) in its Q3 2022 investor letter:
“We reinitiated a small position in Visa, which we had previously owned for years (selling out of the position at higher levels in February). We continue to believe that the long-term secular growth trend towards digital payments remains intact and has been further enhanced by the COVID crisis. The growth in debit cards, contactless payments, e-commerce, and now, buynow-pay-later (BNPL), are all driving digital payment penetration, and we continue to be impressed with the long-term growth potential of V (and our other payment holdings Mastercard, Adyen, and PayPal).”
01. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders as of Q2, 2022: 191
Alphabet Inc. (NASDAQ:GOOG) is one of the most innovative companies in the world and is constantly releasing new products and services. The stock is currently trading at a PE multiple of 18x and offers investors an optimal buying opportunity.
Alphabet Inc. (NASDAQ:GOOG) reported softer than expected Q3 results, with Q3 EPS of $1.06 on sales of $69.09 billion versus the expected $1.25 and $70.61 billion. YouTube ad revenue fell to $7.07 billion from $7.21 billion, while Google Cloud sales rose to $6.87 billion from $6.75 billion in the same quarter of the previous year. While Alphabet Inc. (NASDAQ:GOOG) faces near-term headwinds such as the strong U.S. dollar and a potential recession in 2023, the company, nevertheless, has substantial earnings growth potential given its leading position in search and mobile operating systems.
Bronte Capital discussed Alphabet Inc. (NASDAQ:GOOG) in its Q3 2022 investor letter. Here is what the fund said:
Consensus longs—those stocks widely held and admired by fund managers—have recently underperformed the market. Consensus shorts have been bad shorts. We have over 500 shorts, of which a few are consensus, and we have noticed this effect. But we also own what we think is (alas) the most consensus long in this market: Alphabet Inc. (NASDAQ:GOOG). We find it hard to find any strong reason not to own it. Internet advertising is going from strength to strength and Google’s place in the market is mostly improving. Some of the other bets such as cloud services are beginning to pay off, and finally the CEO is expressing discipline on costs. (Per the consensus, the biggest problem with Google has been a lack of discipline on costs. Every time we look there are another 20 thousand employees.) Being a consensus long, it is down hard. We did say consensus longs are not going well…” (Click here to read the full text)
Disclosure: None. You can also take a look at 13 Best Cybersecurity Stocks To Buy and 10 Best Stocks to Buy According to Billionaire Dan Loeb.
