We recently compiled a list of the 10 Best Low Risk Stocks To Buy in 2025. In this article, we are going to take a look at where Eli Lilly and Company (NYSE:LLY) stands against the other low risk stocks.

Risk is a key consideration in investing and portfolio management, as investors generally aim to achieve the maximum return per minimum unit of risk. The true risk of a stock is impossible to measure or quantify, but there are several metrics, such as the volatility of returns or equity beta, that can gauge the magnitude of risk relative to other companies. The equity beta of a stock represents the sensitivity, or correlation, between the returns of the stock and the returns of the broad market. An equity beta below one means that the stock does not respond as much as the broad market to different events, such as macroeconomic developments, monetary policy changes, etc. When a stock with low risk (low beta) is introduced into a portfolio, the overall expected risk of the portfolio is significantly reduced, while the expected return is usually not significantly compromised, leading to a better risk/return profile.

READ ALSO: 12 Best Long Term Low Risk Stocks to Buy Right Now

There are times when the risk profile of a portfolio becomes a more important consideration than maximizing returns, such as during periods of economic uncertainty, market downturns, or when an investor nears retirement and prioritizes capital preservation over growth. In these situations, investors often shift their focus from aggressive returns, such as growth stocks, to minimizing potential losses, adjusting their portfolios to include more low-beta stocks, bonds, or other defensive assets.

Market volatility, geopolitical tensions, and changes in monetary policy can also drive investors toward safer investments to protect their capital. Understanding and managing risk, particularly through measures like equity beta, allows investors to navigate uncertain times without exposing themselves to unnecessary losses. While low beta stocks are usually more mature and low growth businesses, they can deliver strong returns during bear markets, as capital actively starts flowing into them and inflates their market valuation. Consequently, by rotating into low risk stocks at the right time, investors can achieve two goals at once – not only reduce the risk of the portfolio, but also significantly improve the potential return profile.

We believe the broad stock market is currently at a crossroads and has just entered a new “Trump 2.0 regime,” which will be dominated by unprecedented actions and measures. Not only does the new US administration employ tools such as tariffs that were not used on a large scale for decades, but it has also started some strategic political shifts that could threaten decade-long alliances (such as the US-Europe alliance). All of this, coupled with aggressive cost-cutting in federal budgets and spending, has introduced a lot of uncertainty and difficult-to-digest news for investors.

The US stock market is also in correction mode since the inauguration date, and there is no certainty about when this will stop. With many surveys showing deteriorating spending and business outlooks, a slowdown in GDP growth with a potential bear market becomes a probable scenario for the following quarters. These are the times when buying low risk stocks could significantly improve the risk profile of one’s portfolio without compromising the potential return. Low risk stocks, as gauged by the equity beta, are usually found in sectors like consumer defensive, healthcare, as well as some financials and energy, which tend to have more predictable and stable business models. Given this, we will take a look at some of the best low risk stocks to buy now.

Our Methodology

To compile our list of low risk stocks, we used Finviz to filter the companies that have an equity beta below 1.0x. Then we compared them with Insider Monkey’s proprietary Q4 2024 database of hedge funds ownership and included in the article the top 10 names with the highest number of hedge funds that own the stock.

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).

Eli Lilly and Company (NYSE:LLY)

Number of Hedge Fund Holders: 115

Equity Beta: 0.46x

Eli Lilly and Company (NYSE:LLY) is a global pharmaceutical company specializing in the discovery, development, and commercialization of medicines for diabetes, oncology, immunology, and neuroscience. Its key products include insulin therapies, GLP-1 receptor agonists for diabetes and obesity, cancer treatments, and drugs for autoimmune and neurological disorders. LLY operates in major global markets, distributing its medicines through healthcare providers, pharmacies, and hospitals. The company invests heavily in research and development to drive innovation in biologics, gene therapy, and next-generation treatments. Its strategy focuses on expanding its drug portfolio, advancing precision medicine, and addressing unmet medical needs.

Eli Lilly and Company (NYSE:LLY) has several significant pipeline catalysts anticipated for the remainder of the calendar year, including readouts from the orforglipron program, a small molecule oral GLP-1 nonpeptide agonist with studies in type 2 diabetes and obesity. The company will also receive the first readout from the retatrutide program, a triple-acting injectable incretin being studied in overweight patients with osteoarthritis of the knee, which could potentially offer a significant step change in weight loss outcomes for higher BMI patients who cannot reach their goals on medicines like tirzepatide. In oncology, 2025 is particularly important for the Jaypirca (pirtobrutinib) program, with at least two randomized studies reading out, including one against chemoimmunotherapy in newly diagnosed CLL patients and another head-to-head study against ibrutinib in CLL.

Eli Lilly and Company (NYSE:LLY) maintains a strong position with Verzenio in breast cancer, currently seeing about 15% of new patient starts going to their competitor in overlapping populations, while remaining the standard of care for the high-risk population. Looking ahead, LLY has identified three potential game-changing opportunities: EMBER-4 in breast cancer, Lp(a) in cardiac disease, and Alzheimer’s disease prevention, with the latter particularly significant as it involves preventing disease onset through early intervention with blood testing. With a strong portfolio of drugs under research and a low equity beta of 0.46x, LLY is one of the best low risk stocks to buy in 2025.

Overall LLY ranks 4th on our list of the best low risk stocks to buy in 2025. While we acknowledge the potential of LLY as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than LLY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires

Disclosure: None. This article is originally published at Insider Monkey.