In this article, we will take a look at the 5 safe stocks to buy for starters. To see more such companies, go directly to Starter Stock Portfolio: 15 Safe Stocks To Buy.
5. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 84
About six decades of consistent dividend increases and a solid business make Johnson & Johnson (NYSE:JNJ) one of the safest stocks for any starter stock portfolio. BofA recently ran three screens to identify what it called “sleep at night” stocks for those who want to avoid risks. Johnson & Johnson (NYSE:JNJ) made it to the dividend growers screen.
At the end of the last quarter of 2022, 84 hedge funds had stakes in Johnson & Johnson (NYSE:JNJ), as per Insider Monkey’s database of 943 hedge funds. The biggest stakeholder of Johnson & Johnson (NYSE:JNJ) was Ray Dalio’s Bridgewater Associates which owns a $630 million stake in the company.
4. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 135
Apple Inc. (NASDAQ:AAPL) remains one of the top choices of retail and hedge fund investors. It is a key part of all the total market ETFs and is considered among the safest stocks, thanks to Apple Inc. (NASDAQ:AAPL)’s active strategy to diversify its business and revenue streams. According to the latest media reports, Apple Inc. (NASDAQ:AAPL) is planning to spend $1 billion annually on movies that would be released in theaters.
Apple Inc. (NASDAQ:AAPL) is already spending heavily on its streaming service. Apple Inc. (NASDAQ:AAPL)’s software and services arm is also growing. All of this is part of Apple Inc. (NASDAQ:AAPL)’s efforts to cut its reliance on its core iPhone business.
3. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 152
Alphabet Inc. (NASDAQ:GOOG) has been under pressure in 2023 amid threats from Microsoft Corporation (NASDAQ:MSFT)’s Bing on the back of AI features the Redmond software company led by Satya Nadella is integrating with its search engine. But several Wall Street analysts have said Alphabet Inc. (NASDAQ:GOOG) has no significant risk in the search business. The latest such comment came from Mark Kelley at Stifel who resumed covering Alphabet Inc. (NASDAQ:GOOG) with a Buy rating and a $130 price target. While the analyst said the latest demos of the Bing AI capabilities have been impressive, he does not see a “monumental shift in consumer behavior, or Search ad spend shifts.”
2. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 240
Amazon.com, Inc. (NASDAQ:AMZN) is one of the safest stocks due to its dominance in the growing e-commerce industry. Amazon.com, Inc. (NASDAQ:AMZN)’s Cloud business is also one of the biggest growth catalysts for the stock. Amazon.com, Inc. (NASDAQ:AMZN) is actively expanding into other areas, including entertainment and healthcare.
Recently, BofA praised Amazon.com, Inc. (NASDAQ:AMZN)’s market share in the home furnishings segment. BofA said that Amazon.com, Inc. (NASDAQ:AMZN) was one of the companies that have taken away the home furnishing market share from Bed Bath and Beyond.
At the end of the last quarter of 2022, 240 out of the 943 hedge funds tracked by Insider Monkey reported owning stakes in Amazon.com, Inc. (NASDAQ:AMZN). The biggest stakeholder of Amazon.com, Inc. (NASDAQ:AMZN) among these hedge funds was Natixis Global Asset Management’s Harris Associates which had a $1.6 billion stake in the company.
Artisan Global Opportunities Fund made the following comment about Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2022 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) is the world’s largest retailer. The company has gone through a period of massive investment as it doubled its fulfillment network and hired over 800,000 people to meet growing demand over the past few years. Capital expenditure (capex) in the 2017 to 2019 period was $10 billion – $17 billion per year before ramping up to $40 billion in 2020, $61 billion in 2021 and is expected to end 2022 at another $61 billion. We believe the company is in the later innings of this capex cycle and will be transitioning toward a period of harvesting those investments through higher margins and free cash flow generation. At a valuation that appears to be discounting a deteriorating environment for consumer spending, we decided to start a GardenSM position.”
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 259
Microsoft Corporation (NASDAQ:MSFT), which has been gaining attention throughout this year on the back of the company’s AI efforts and its partnership with OpenAI, ranks first in our list of the best stocks for beginners. Microsoft Corporation (NASDAQ:MSFT) is a strong candidate for a starter stock portfolio because of its huge presence in Cloud, enterprise, AI and several other business segments that are growing. Recently, AllianceBernstein said it will launch three actively managed ETFs. Microsoft Corporation (NASDAQ:MSFT), along with several other major tech names, will be an important part of these ETFs.
Microsoft Corporation (NASDAQ:MSFT) is also the most popular stock among the elite hedge funds tracked by Insider Monkey. 259 hedge funds in Insider Monkey’s database of 943 funds had stakes in the company.
Ariel Global Strategy made the following comment about Microsoft Corporation (NASDAQ:MSFT) in its Q4 2022 investor letter:
“Enterprise software provider Microsoft Corporation (NASDAQ:MSFT) also traded lower, as higher interest rates and economic concerns have created headwinds for growth-oriented technology companies. We believe this price action runs counter to Microsoft’s solid fundamentals, competitive positioning and long-term business outlook. We continue to anchor on the company driving value creation by capitalizing on a broad and deep set of opportunities, most notably within hybrid cloud infrastructure. The platform continues to demonstrate share gains and strong multi-year purchase intent as enterprises transition to cloud based platforms. At current trading levels, we believe Microsoft’s risk/reward is skewed to the upside.”
You can also take a peek at 15 Most Promising Dividend Stocks According to Analysts and 15 Most Promising Long-Term Stocks.
