In this article, we will take a look at the starter stock portfolio: 1o safe stocks to invest in now.
The Market Outlook for the Rest of 2024
A probable rate cut has provided hope for the economy. Despite that, the impact on financial markets and stocks remains uncertain. On September 4, Adam Parker, Trivariate Research founder and CEO, appeared in an interview on CNBC. Parker was not surprised that tech stocks were down by close to 4% at the beginning of September, that too right before an impending rate cut. Parker highlights that the inconsistency in the market at the moment is not normal, and with multiple rate cuts over the next two years, he has no reason to hold a positive economic outlook. He suggests that eight probable rate cuts indicate that the economy is slowing, consumer spending is declining, and unemployment is rising, all of which are not good signs for the market. The interviewer counter questions that eight rate cuts with a 25 basis point reduction are not as disastrous to presume a faltering economy. Parker then highlights that rate cuts in the past have been supported by consistent data, an incremental fiscal, and an expansion of the balance sheet, all of which are currently out of the picture. You can also read our piece on the best battery stocks to buy according to short sellers.
The Possible Impact of Rate Cuts on Stocks
On September 2, CNBC published a detailed report on the impact of rate cuts on the stock market in the United States. The Fed, in the footsteps of countries in Europe and Asia, recently announced an easing cycle, after a long period of high interest rates. As per current pricing data, the Fed is expected to have three 25-basis point cuts by the end of this year. Speaking of the global economic outlook, 2025 will see a lower-rate environment followed by easing inflationary pressures. However, the fear of recession in the United States tells another story. Analysts believe that the last four months of 2024 will be considerably weak and choppy amid geopolitical factors, uncertainty from the AI sector, corporate earnings, and most importantly, an overdue consolidation correction.
On September 3, JP Morgan reported that investors must not expect the cutting cycle to provide a fresh start to stocks. Leading strategists at the firm suggested that the rate cut cycle is rather reactive and is in response to a wilting economy, having little to no impact on stocks. Paul Christopher, head of global investment strategy, on the other hand, suggested that the market environment today resembles the market in 1995, increasing hopes for a market upside amid stable GDP strength and forecasts.
Bear market or bull market, certain stocks deserve a place in every investor’s portfolio. These are long-term opportunities to hold and will continue to provide superior returns, as they have for decades. With that let’s take a look at the 10 safe stocks to invest in now.
A trader in a financial institution using fundamentals analysis to select stocks for a portfolio.
Our Methodology
To come up with the 10 safe stocks to invest in now, we looked for well-established companies in the energy, finance, healthcare, technology, and fast-moving consumer goods (FMCG) industries. These stocks have a history of performing well and boasting consistent financial results, making them ideal and safe long term investments for beginners. We then picked the top 10 stocks that were the most widely held by money managers and ranked them in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Starter Stock Portfolio: 10 Safe Stocks To Invest In Now
10. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 100
Eli Lilly and Company (NYSE:LLY) ranks as the 10th safest stock to invest in now. Eli Lilly and Company (NYSE:LLY) is a pharmaceutical company that sells products to 125 countries and has offices in 18 countries. The company produces and sells various medicines for serious illnesses including Mounjaro, Zepbound, and Verzenio, also referred to as the “blockbuster” medicines in the US.
Eli Lilly’s Zepbound, a medicine for patients with obesity or excess weight, brought in $1.2 billion in sales in the second quarter of 2024. Similarly, Mounjaro, an injection for adults with type 2 diabetes, logged in $3.1 billion in sales. With solid investments in research and development, Eli Lilly and Company (NYSE:LLY) has also been running trials to assess whether Tirzepatide can prevent the development of type 2 diabetes, rather than just treating it. Current trials reveal that the drug presented a 94% lower risk of progressing to diabetes among pre-diabetic adults who were overweight or obese.
In the second quarter of 2024, Eli Lilly and Company (NYSE:LLY) reported revenue worth $11.3 billion, up by 36% year-over-year, beating analyst estimates by $1.34 billion. The United States is the major market and accounted for nearly 64% of the company’s sales in 2023. In addition to that, the company’s products are gaining immense traction across the globe. Its new drug, Tirzepatide received approval on July 19th from National Medical Products Administration in China. Previously, the drug was approved by the European Union in April 2024, a breakthrough in the world of medicine.
Overall, Eli Lilly and Company (NYSE:LLY) is consistent with its financial performance and is also the giant behind some of the most important medicines in the United States. The company is notorious for rolling out new drugs regularly, which shows its commitment to healthcare.
Analysts are bullish on LLY and their 12-month high price target of $1,025 points to a 7% upside from current levels. In Q2 2024, 100 hedge funds owned stakes in Eli Lilly and Company (NYSE:LLY), with total stakes amounting to $16 billion. With nearly 5 million shares, Fisher Asset Management was the company’s leading stakeholder.
Baron Funds mentioned Eli Lilly and Company (NYSE:LLY) in its Q2 2024 investor letter:
“Shares of global pharmaceutical company Eli Lilly and Company increased on continued investor enthusiasm around GLP-1 drugs for diabetes and obesity. We remain shareholders. Lilly’s Mounjaro/Zepbound not only offers superb blood sugar control for diabetics but can drive 20%-plus weight loss and likely improve cardiovascular outcomes in both diabetic and non-diabetic obese patients. Lilly is developing next generation drugs, including retatrutide, which drives approximately 25% weight loss, and orforglipron, a daily pill that produces approximately 15% weight loss. In the U.S. alone, there are 32 million Type 2 diabetics and an additional 105 million obese patients who we estimate would qualify for GLP-1 drugs. Although supply and access are limited near term, we think GLP-1 drugs will become standard of care for both diabetes and obesity and will become a $150 billion-plus category. We see Lilly setting a high efficacy bar and capturing significant long-term market share. We think the adoption of GLP-1s will drive Lilly to triple total revenue by 2030.”
9. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 111
JPMorgan Chase & Co. (NYSE:JPM) is one of the safest stocks to buy. The multinational finance company is headquartered in the United States, serving millions of customers in over 100 countries and territories. The company provides investment banking solutions, risk management services, and capital-raising services to companies, institutions, and the government. JPMorgan Chase & Co. (NYSE:JPM) runs several subsidiaries including Chase Bank, Global Shares, Nutmeg, WePay, and Chase Paymentech, to name a few.
As of March 31, JPMorgan Chase & Co. (NYSE:JPM) has $4.1 trillion in assets and $3.6 trillion in assets in management, making it the largest bank in the United States, ahead of its competitors including Bank of America and Wells Fargo. During the first three months of 2024, the company raised $655 in total credit and capital for consumers, small businesses, government entities, and nonprofit entities.
Financial results aside, the company understands the dire need to integrate technology for operational efficiency. Earlier in August, JPMorgan Chase & Co. (NYSE:JPM) launched a generative AI assistant that helps over 60,000 employees complete tedious tasks such as drafting emails and reporting. On the customer front, the company introduced in-store pay-by-face biometric payment solutions for merchants in the US. Additionally, earlier in May, the company launched a new data-managed service for institutional investors allowing them to streamline their operating models for consistent data.
JPMorgan Chase & Co.’s (NYSE:JPM) strong customer base is a testament to its financial performance, which is also its economic moat. Overall, JPM was held by 111 hedge funds in the second quarter of 2024, with total stakes worth $6.98 billion. Fisher Asset Management is the top shareholder of the company with a position worth $2.58 billion.
Carillon Tower Advisers’s Carillon Eagle Growth & Income Fund stated the following regarding JPMorgan Chase & Co. (NYSE:JPM) in its first quarter 2024 investor letter:
“JPMorgan Chase & Co. (NYSE:JPM) contributed positively to performance following solid financial results and positive guidance for the remainder of 2024. Moreover, growing chatter around rising capital markets activity likely contributed to the stock’s strong performance relative to other banks. Recall that JPMorgan has a robust capital markets franchise.”
8. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 114
UnitedHealth Group Incorporated (NYSE:UNH) ranks eighth on our list of the safest stocks to invest in. It is a multinational health insurance and services company based in the United States. UnitedHealth Group Incorporated (NYSE:UNH) owns a range of subsidiaries including UnitedHealthcare Servic LLC, Optum, Change Healthcare, and United Health Foundation, to name a few.
In less than a decade, UnitedHealth Group Incorporated (NYSE:UNH) has grown its revenue from $101 billion in 2011 to $372 billion in 2023. The company currently provides health coverage to over 50 million people in the United States, indicative of its crucial position. In the past year, UnitedHealth’s professionals made 2.5 million home visits, enabling the swift identification of health emergencies that would have gone undiagnosed otherwise. Over 75% of patients received a follow-up within 90 days of the original visit in a clinical setting.
In the second quarter of 2024, UnitedHealth Group Incorporated (NYSE:UNH) logged $98.9 billion in revenue, up by nearly $6 billion. The company’s financial results were led by Optum and UnitedHealthcare. UnitedHealthcare, its healthcare benefits subsidiary, reported revenue worth $74.1 billion, up by $4 billion, year-over-year. Overall, customers in the segment grew by 2.3 million to reach 29.6 million in the United States. Optum, the company’s global healthcare services provider which uses data to optimize care quality, reduce costs, and improve performance, logged $62.9 billion in revenue, up by $6 billion year-over-year.
The healthcare market in the United States is currently valued at $5 trillion, providing a golden opportunity to UnitedHealth Group Incorporated (NYSE:UNH). That said, the company believes it holds a strong position to post strong results in 2025, which is evident from its 148 million strong client base.
Analysts are bullish on UNH and their 12-month median price target of $620 points to a 4% upside from current levels. Overall, 114 investors were bullish on the stock at the end of Q2 2024, with total stakes amounting to $12.5 billion. As of June 30, Fisher Asset Management was the largest shareholder with a position worth $1.57 billion.
Invesco Distributors, Inc. stated the following regarding UnitedHealth Group Incorporated (NYSE:UNH) in its Q2 2024 investor letter:
“UnitedHealth Group Incorporated (NYSE:UNH): Like many managed care providers, United Health has come under pressure from rising medical costs and higher-than-expected utilization. The stock is currently undervalued based on our analysis. We view the company as a high-quality compounder with secular growth opportunities in the managed care segment. The US Presidential election may cause additional near-term uncertainty, but we believe United Health will be able to rebound once pricing and utilization issues normalize.”