In this article, we will be taking a look at 12 safe stocks to invest in now. To skip our detailed analysis of current stock market news, you can go directly to see the Starter Stock Portfolio: 5 Safe Stocks To Invest In Now.
Safe Investing For Beginner Investors
Investing in defensive sectors has always been a go-to strategy for investors who like to play it safe, which is why many new investors in particular are heavily drawn to these areas in the market. Traditionally, the main defensive sectors in the market are healthcare, utilities, and consumer staples. Over the past year, some financial professionals saw a trend of most investors avoiding defensive stocks, but this may come to an end in 2024, as John Mowrey, NFJ Investment Group’s executive managing director and CIO, noted on CNBC’s “Squawk Box” on January 30:
“You’ve been paid to avoid some of the more defensive areas because of higher interest rates. So if you look at utilities, if you look at staples, if you look at healthcare, all of these higher-yielding areas have been hollowed out because you’ve been paid to avoid them. Everyone’s been chasing the Mag 7 and the AI trend and then they’re clipping coupons in fixed income. That’s created a real opportunity in the more defensive areas. So should you get a bumpier period in the market, I think you’ll get paid to be in those areas. So I like some of the more defensive areas.”
Mowrey believes that investors would be well-served to start moving into defensive areas as they are offering more attractive valuations, healthy dividends, and dividend growth, the last of which is a strong barrier against inflation. Considering these factors, many believe that defensive stocks are among the best beginner stocks to buy at present.
Considering the above, major fund managers are gravitating towards defensive investments. For instance, on February 21, Thomas Taw, the BlackRock APAC iShares Investment Strategy Head, joined “Bloomberg Markets: Asia” to discuss his recent moves. Taw noted that he is now positioning “more defensively in equity portfolios” instead of pursuing higher valuation companies and that he is particularly looking into more “dividend type of investing.”
Tech-Driven Growth in Defensive Sectors
Investments in defensive sectors have been driving growth exponentially. For instance, JPMorgan Chase & Co.’s healthcare sector outlook report for 2024 noted that the onset of the COVID-19 pandemic propelled venture capitalists and investors to provide financial backing to the healthcare sector, resulting in investments in healthcare startups reaching all-time highs in 2021. The focus on tech in healthcare has also resulted in investors committing significant capital to medical technologies. Additionally, Deloitte’s 2024 outlook on the utilities sector noted that the US Inflation Reduction Act’s one-year anniversary marked the moment when investments worth at least $122 billion in clean-energy generation projects were confirmed. Like healthcare, the utilities sector is also increasingly turning to technology in its operations and goals for electrification, with Deloitte stating that 2024 will see power and utilities companies turning to artificial intelligence and other digital solutions as they work to transform the grid.
Our discussion above highlights the key role that tech has been playing in recent times, not just in the markets but also in terms of contributing to the growth of other sectors. Tech’s contributions till date have resulted in many financial professionals beginning to consider it as a defensive sector as well, making stocks like Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Meta Platforms, Inc. (NASDAQ:META) good options for those looking to buy into some of the best beginner stocks. In our list below, we have highlighted several defensive stocks, including some of the best tech stocks and best consumer staples stocks to buy, among others.
A trader working diligently at her desk, evaluating stocks of multiple industries.
Our Methodology
To compile our list of the best beginner stocks to buy, we screened for stocks in defensive sectors such as healthcare, utilities, consumer staples, and technology. We then shortlisted and ranked the stocks based on the number of hedge funds holding stakes in them by using Insider Monkey’s hedge fund data for the fourth quarter. The stocks are ranked from the lowest to the highest number of hedge funds holding stakes in them. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by over 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
Starter Stock Portfolio: Safe Stocks To Invest In Now
12. Vistra Corp. (NYSE:VST)
Number of Hedge Fund Holders: 56
Vistra Corp. (NYSE:VST) is an independent power producer and energy trader corporation in the utilities sector. It retails electricity and natural gas to residential, commercial, and industrial customers and is based in Irving, Texas.
An Overweight rating and a $78 price target were maintained on Vistra Corp. (NYSE:VST) on March 26 by Morgan Stanley analysts.
A total of 56 hedge funds were long Vistra Corp. (NYSE:VST) in the fourth quarter, with a total stake value of $1.3 billion.
Sound Shore Management said the following about Vistra Corp. (NYSE:VST) in its fourth-quarter 2023 investor letter:
“For the year, we had a number of stocks up 50% or more and the list includes a diverse set of industries such as homebuilding, heavy truck manufacturing, and semiconductor capital equipment. We would like to highlight one outstanding contributor for the year, electricity generator and marketer Vistra Corp. (NYSE:VST), a low-cost provider with a healthy balance between generation and retail. Demand for electricity is growing and notably, load peaks are changing as well. As the country brings on more renewables and adjusts to greater demand later in the day due to increased use of electric heat pumps and electric car charging, reliable clean power is at a premium. Vistra is well positioned with diversified fuel sources including solar, natural gas, coal, nuclear and battery power storage facilities, along with a marketing division to manage price volatility. The company will soon be closing its accretive acquisition of merchant power generator, Energy Harbor, and the deal will make Vistra the second largest carbon free, nuclear electricity provider behind Constellation Energy, another portfolio holding. Vistra CEO Jim Burke, leads a veteran utility management team that is committed to transitioning the company’s portfolio to a sustainable footprint by closing older fossil fuel plants and increasing the renewables portfolio. They have also been an important voice to advocate for changes that will accelerate the global transition to a clean, renewable energy future, while maintaining adequate near-term supply. Vistra has a strong balance sheet that allows the company to invest in innovation and operational improvements. Additionally, management is using excess cash flow to buy 40% of the outstanding shares over a five year period and they are more than half way through that process. Currently valued at 9 times earnings with a 17% free cash flow yield and a 2.3% dividend, the stock remains a full position. As you can see from the chart below, Vistra’s performance was quite different than many other electricity providers and provides further evidence of the disparate performance that can often be found within a sector.”
Like Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Meta Platforms, Inc. (NASDAQ:META), Vistra Corp. (NYSE:VST) is among the best beginner stocks to buy this year.
11. PG&E Corporation (NYSE:PCG)
Number of Hedge Fund Holders: 58
Third Point was the most prominent shareholder in PG&E Corporation (NYSE:PCG) at the end of the fourth quarter, holding 57.9 million shares in the company.
PG&E Corporation (NYSE:PCG) is another utility company on our list of the best beginner stocks. It is based in Oakland, California, and engages in the sale and delivery of electricity and natural gas. The company uses nuclear, hydroelectric, fossil fuels, fuel cells, and photovoltaic sources to generate electricity.
On January 22, Barclays analysts maintained an Overweight rating and a $19 price target on PG&E Corporation (NYSE:PCG).
PG&E Corporation (NYSE:PCG) was spotted in the 13F holdings of 58 hedge funds in the fourth quarter, with a total stake value of $2.9 billion.
10. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 65
Wells Fargo analysts maintained an Overweight rating and $85 price target on NextEra Energy, Inc. (NYSE:NEE) on March 19.
NextEra Energy, Inc. (NYSE:NEE) is among the best beginner stocks to buy now. It generates, transmits, distributes, and sells electric power to retail and wholesale customers. The company is based in Juno Beach, Florida.
Our hedge fund data for the fourth quarter shows 65 hedge funds long NextEra Energy, Inc. (NYSE:NEE), with a total stake value of $959.2 million.
ClearBridge Investments mentioned NextEra Energy, Inc. (NYSE:NEE) in its fourth-quarter 2023 investor letter:
“We added a new position in NextEra Energy, Inc. (NYSE:NEE), in the utilities sector, which acquires, owns and manages contracted clean energy projects in the U.S. The company was at the center of the defensive stock storm when it slowed its renewable growth outlook modestly in late September, and the stock collapsed almost 30% in less than two weeks. We saw this as an opportunity to invest in arguably the best combination of a regulated utility and an experienced renewable operator with good long-term growth options. Even at a much-reduced estimated growth rate from higher financing costs, which will likely prove to be conservative, our estimate of intrinsic business value is materially higher.”
9. Philip Morris International Inc. (NYSE:PM)
Number of Hedge Fund Holders: 68
Holding over 15 million shares in the company, Fundsmith LLP was the largest shareholder in Philip Morris International Inc. (NYSE:PM) at the end of the fourth quarter.
As of February 13, Societe Generale analysts maintain a Hold rating and $87.5 price target on Philip Morris International Inc. (NYSE:PM).
Based in Stamford, Connecticut, Philip Morris International Inc. (NYSE:PM) is a consumer staples company in the tobacco industry. It offers cigarettes and smoke-free products such as heat-not-burn, vapor, and oral nicotine products under the IQOS and ZYN brands. It is among the best beginner stocks to buy now.
Philip Morris International Inc. (NYSE:PM) was seen in the portfolios of 68 hedge funds in the fourth quarter, with a total stake value of $5.5 billion.
8. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 71
For the fourth quarter, 71 hedge funds were long The Procter & Gamble Company (NYSE:PG), with a total stake value of $5.9 billion.
The Procter & Gamble Company (NYSE:PG) is another consumer staples company on our list of the best beginner stocks, operating in the household products industry. It provides branded consumer packaged goods and is based in Cincinnati, Ohio.
Truist Securities analysts upgraded The Procter & Gamble Company (NYSE:PG) from Hold to Buy on March 11 and placed a $175 price target on the stock.
7. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 85
Fisher Asset Management was the largest shareholder in Walmart Inc. (NYSE:WMT) at the end of the fourth quarter, holding 28.6 million shares in the company.
Walmart Inc. (NYSE:WMT) had 85 hedge funds long its stock in the fourth quarter, with a total stake value of $6.2 billion.
Based in Bentonville, Arizona, Walmart Inc. (NYSE:WMT) is a consumer staples merchandise retail company on our list of the best beginner stocks. It operates supercenters, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, and discount stores.
An Outperform rating and a $68 price target were maintained on Walmart Inc. (NYSE:WMT) on March 27 by Telsey Advisory Group analysts.
6. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 102
Eli Lilly and Company (NYSE:LLY) is a pharmaceutical company based in Indianapolis, Indiana. It offers human and animal pharmaceuticals and oncology products, among more.
For the fourth quarter, we saw 102 hedge funds long Eli Lilly and Company (NYSE:LLY), with a total stake value of $11.2 billion.
An $850 price target and a Buy rating were maintained on Eli Lilly and Company (NYSE:LLY) on March 22 by Truist Securities analysts.
Like Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Meta Platforms, Inc. (NASDAQ:META), Eli Lilly and Company (NYSE:LLY) is among the best beginner stocks to invest in today.
Click to continue reading and see the Starter Stock Portfolio: 5 Safe Stocks To Invest In Now.
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Disclosure: None. Starter Stock Portfolio: 12 Safe Stocks To Invest In Now is originally published on Insider Monkey.
In this piece, we will take a look at the 12 best single digit stocks to invest in. If you want to skip our coverage of affordable stocks and how they, like all other stocks such as small cap and large cap stocks, benefit and suffer from the broader macroeconomic environment, then you can take a look at the 5 Best Single Digit Stocks To Invest In.
Stocks can broadly be classified into three categories based on their market capitalization. Each of these represents firms whose shares operate with different dynamics within the broader market climate. The three primary stock categories are small, mid, and large caps, with the passage of time that has seen trillion dollar valuations the likes of NVIDIA Corporation (NASDAQ:NVDA), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL) has also created new categories commonly called mega cap stocks.
Similarly, the proliferation of computing products across the financial industry has made stock trading easier, leading to thousands of firms in categories such as micro and nano cap stocks. These stocks, which include firms whose shares trade in the single digits, are on the more ‘affordable’ end of the spectrum in literal terms. Single digit stocks are a small upgrade over the broader category of well known stocks that are called penny stocks. Typically, these stocks refer to firms whose shares trade below $5, and when we consider the general benefits and drawbacks of investing, single digit stocks, and penny stocks follow the same rules.
Both offer a higher potential for larger percentage returns via share price appreciation. Similarly, since penny stocks and single digit stocks belong to companies that receive little media coverage, the potential of scammers exploiting unwitting investors is high. This is because during the initial stage of a ‘pump’ during a typical scam, the shares of a single digit or penny stock appreciate much faster than the media can respond to determine if the performance is driven by underlying fundamentals or other legitimate tailwinds. Then, as more investors pile on, should the price drop, then most people end up losing their money.
However, where there’s risk there’s a reward, and one key advantage that single digit stocks have over penny stocks is that since they also include firms whose shares trade between $5 and $10, the opportunities from profiting also increase with the growing comfort of a heftier share price. Additionally, another key benefit that is rather exclusive to single digit stocks is that they can often involve the shares of well established and sizeable foreign entities who also make their American Depository Receipts (ADRs) available for trading on American stock markets.
This trend is present predominantly in the banking sector, with foreign or ex-US banks such as Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG), Lloyds Banking Group plc (NYSE:LYG), and Banco Santander, S.A. (NYSE:SAN) being apt examples. Each of these is a major player in the financial systems of their countries, with a role similar to U.S. banking giants such as JPMorgan Chase & Co. (NYSE:JPM) and The Goldman Sachs Group, Inc. (NYSE:GS).
Therefore, investing in single digit stocks offers a chance of stability as well as profit taking. Continuing with our example of single digit banking stocks, MUFJ’s shares are up by a respectable 16% year to date, despite the fact that Japan’s economy, like other developed peers such as the United Kingdom and Germany, is not performing well. Similarly, even though Britain is officially in recession territory, Lloyd’s stock has shed just 6% over the past twelve months and had the shares not dropped in January, then just like the British economy, the stock would also be nearly flat in growth terms.
Before we head to our list of the best single digit stocks, it’s important to also keep in mind recent stock market and economic news. With NVIDIA Corporation (NASDAQ:NVDA)’s blockbuster earnings out of the way, investors will now focus on interest rates and U.S. GDP growth – both of which are quite interlinked. Starting with the latter, S&P Global Inc. (NYSE:SPGI), ahead of its flagship S&P 500 crossing the coveted 5,000 point barrier and setting a new record, also upgraded its forecasts for U.S. economic growth in 2024. The ratings agency now believes that the American economy will grow by 2.4% in 2024, for a significant upward revision over the previous estimate of 1.5%. As this would hint on its own, the Federal Reserve’s latest meeting minutes also show that the central bank is worried about cutting rates too soon rather than too late.
So, with single digit stocks offering the promise of returns and stability, we decided to look at what stocks hedge funds are buying. Some notable picks are Southwestern Energy Company (NYSE:SWN), Warner Bros. Discovery, Inc. (NASDAQ:WBD), and Transocean Ltd. (NYSE:RIG).
A close up of hands counting a vast stack of money in a bank vault.
Our Methodology
To make our list of the best single digit stocks to buy, we ranked the 60 most valuable single digit stocks in terms of market capitalization by the number of hedge funds that had bought the shares as of December 2023. Out of these, the single digit stocks with the highest number of hedge fund investors were chosen.
For these best single digit stocks, we have also mentioned hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
12 Best Single Digit Stocks To Invest In
12. Garrett Motion Inc. (NASDAQ:GTX)
Number of Hedge Fund Investors In Q4 2023: 32
Garrett Motion Inc. (NASDAQ:GTX) is an American car parts manufacturer that sells performance products like turbos for cars and air compressors for industrial use. It marks a slow start to our list of the best single digit stocks by having beaten analyst EPS estimates in only one of its four latest quarters.
Insider Monkey dug through 933 hedge funds for their fourth quarter of 2023 shareholdings to find out that 32 had invested in the firm. The largest Garrett Motion Inc. (NASDAQ:GTX) shareholder in our database is Howard Marks’s Oaktree Capital Management courtesy of its $426 million stake.
Along with, Warner Bros. Discovery, Inc. (NASDAQ:WBD), Southwestern Energy Company (NYSE:SWN)and Transocean Ltd. (NYSE:RIG), Garrett Motion Inc. (NASDAQ:GTX) is a top single digit stock that hedge funds are piling into.
11. Marqeta, Inc. (NASDAQ:MQ)
Number of Hedge Fund Investors In Q4 2023: 32
Marqeta, Inc. (NASDAQ:MQ) is an American software company that provides financial technology products to help users to issue cards and run other functions. Amidst a tumultuous run on the earnings front that has seen the firm miss estimates several times, the shares received a boost in February 2024 when Bank of America upgraded them to Buy from Neutral and cited the potential for Marqeta, Inc. (NASDAQ:MQ)’s top line to grow by 20%.
By the end of 2023’s December quarter, 32 out of the 933 hedge funds profiled by Insider Monkey had bought a stake in Marqeta, Inc. (NASDAQ:MQ). Jim Simons’ Renaissance Technologies was the firm’s biggest hedge fund shareholder since it owned $76 million worth of shares.
10. Newell Brands Inc. (NASDAQ:NWL)
Number of Hedge Fund Investors In Q4 2023: 33
Newell Brands Inc. (NASDAQ:NWL) is a diversified consumer goods firm that sells products like coffee and cleaning items. Unlike Marqeta, whose shares soared in 2024, Newell Brands Inc. (NASDAQ:NWL)’s fell to record lows in February 2024 after its full year earnings guidance disappointed investors.
As of December 2023 end, 33 out of the 933 hedge funds covered by Insider Monkey’s research had held a stake in the firm. Newell Brands Inc. (NASDAQ:NWL)’s largest stakeholder among these is Richard S. Pzena’s Pzena Investment Management due to its $469 million investment.
9. Clarivate Plc (NYSE:CLVT)
Number of Hedge Fund Investors In Q4 2023: 33
Clarivate Plc (NYSE:CLVT) is a sizeable British technology company that allows researchers and others to consolidate, analyze, and work with their data. A key stock to watch amidst the current AI wave, its shares are rated Buy on average but the average analyst share price target offers no upside.
For their fourth quarter of 2023 shareholdings, 33 out of the 933 hedge funds tracked by Insider Monkey had bought and owned Clarivate Plc (NYSE:CLVT)’s shares. Leonard Green’s Leonard Green & Partners was the biggest investor since it owned $1 billion worth of shares.
8. BGC Group, Inc. (NASDAQ:BGC)
Number of Hedge Fund Investors In Q4 2023: 34
BGC Group, Inc. (NASDAQ:BGC) is an American brokerage that deals in a wide variety of investment products and securities. It’s one of the more interesting stocks on our list of the best single digit stocks since while the shares soared after BGC Group, Inc. (NASDAQ:BGC) announced record earnings results in February 2024, they ended up reversing all the gains a week later.
During December 2023, 34 out of the 933 hedge funds covered by Insider Monkey’s research held a stake in BGC Group, Inc. (NASDAQ:BGC).
7. Kinross Gold Corporation (NYSE:KGC)
Number of Hedge Fund Investors In Q4 2023: 36
Kinross Gold Corporation (NYSE:KGC) is a Canadian gold company with operations in the U.S., Canada, and other countries. With gold seeing increased demand all over the world over the past twelve months, Kinross Gold Corporation (NYSE:KGC) has done well on the earnings front by having beaten analyst EPS estimates in all four of its latest quarters.
By the end of 2023’s final quarter, 36 out of the 933 hedge funds profiled by Insider Monkey were the firm’s shareholders. Kinross Gold Corporation (NYSE:KGC)’s largest hedge fund stakeholder is Jim Simons’ Renaissance Technologies due to its $178 million stake.
6. Grab Holdings Limited (NASDAQ:GRAB)
Number of Hedge Fund Investors In Q4 2023: 37
Grab Holdings Limited (NASDAQ:GRAB) is a Singaporean software company whose app provides users with a unified platform to order goods, and rides, and avail of other services. Even though the firm sought to woo investors with a share repurchase program, its full year 2023 earnings report still led to a sizeable share price drop due to a $2.75 billion 2024 revenue guidance that fell short of analyst estimates.
After digging through 933 hedge fund portfolios for last year’s fourth quarter, Insider Monkey found that 37 had bought and owned Grab Holdings Limited (NASDAQ:GRAB)’s shares. Chase Coleman and Feroze Dewan’s Tiger Global Management LLC was the biggest investor since it owned $172 million worth of shares.
Southwestern Energy Company (NYSE:SWN), Grab Holdings Limited (NASDAQ:GRAB)Warner Bros. Discovery, Inc. (NASDAQ:WBD), and Transocean Ltd. (NYSE:RIG) are some top hedge fund single digit stock picks.
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Disclosure: None. 12 Best Single Digit Stocks To Invest In is originally published on Insider Monkey.