The current short-term rally has put the stock market at a crucial point. Many stocks have been devastated by recent sell-offs and investors are still divided on whether or not the market is still in oversold territory. While some point to planned interest rate hikes by the Federal Reserve (Fed) and call for a recession, others point to oversold stocks to justify another rally in the market.
Either way, it is clear that the stock market is currently very volatile. There are unprecedented levels of uncertainty as the Fed must battle both inflation and a shrinking economy. Unlike 2008 and 2020, the Fed cannot use quantitative easing to stimulate the economy. This will only add more fuel to inflation. The current situation is therefore particularly risky.
Of course, certain sectors, such as technology, are certainly harder hit. However, many stocks continue to be overvalued relative to the rest of the stock market and could fall further. With this in mind, investing in safe and stable stocks is a good option.
Thus, the following seven safest stocks are unlikely to be as volatile:
|COST||Costco Wholesale Corporation||$474.29|
|TSM||Taiwan Semiconductor Manufacturing Company Limited||$94.44|
|KO||The Coca-Cola Company||$63.12|
|FLO||Flowers Foods, Inc.||$26.11|
The safest stocks to buy: Costco (COST)
Costco (NASDAQ:COST) could be a bargain after its massive sale. The stock has likely bottomed and may continue to rise due to its strong long-term financials.
Costco saw growth in revenue and net income this quarter. The company also increased its net profit margin and earnings per share (EPS). Although its price/earnings ratio (P/E) is still relatively high, the stock has performed exceptionally well in turbulent times. Additionally, the company is in a stable long-term financial uptrend.
Additionally, Costco’s membership model has helped it fight inflation better than its competitors. Therefore, the current rebound in COST action could be a great opportunity to get into the action.
Taiwan Semiconductor (TSM)
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) saw a 33% negative sell which has since cooled considerably and the stock may be looking at a rebound. The global shortage of semiconductors caused the stock to soar more than 200% after the pandemic. However, the recent selloff likely drove the stock below its intrinsic value.
Taiwan Semiconductor released strong financials this quarter. Year-over-year (YOY), quarterly revenue and net profit increased by 35.5% and 45.13%, respectively. This is due to a strong demand for semiconductors. Moreover, Taiwan Semiconductor’s net profit margin is also extraordinary at 41.28%, which increased from 7.11% this quarter.
Moreover, the semiconductor shortage is unlikely to be resolved any time soon. Supply chain issues persist and the company will continue to benefit from strong demand and rising prices for semiconductors. It is one of the safest values due to its exceptional growth.
Safest stocks to buy: Broadcom Inc. (AVGO)
Broadcom Inc. (NASDAQ:AVGO) is a company that manufactures and supplies a wide range of hardware and software products, including semiconductors.
The company’s shares have seen steady growth in the market with very little volatility. Additionally, its finances are strong, with quarterly revenue and year-over-year net profit of 15.79% and 83.9%, respectively.
Additionally, the company announced that it will acquire vmware, Inc. (NYSE:vmw) for $69.1 billion, signaling a secure financial position.
Still, investors should remain cautious in the short term as the deal with VMware could add volatility to the stock. However, AVGO should remain among the safest stocks over the long term.
Coca-Cola Company (KO)
Coca Cola (NYSE:KO) is one of the safest stocks to buy. The stock has always remained stable with very little volatility. Even in today’s volatile market, knockout action has remained an outlier.
Moreover, this household brand is unlikely to die out. Even in the worst case, Coca-Cola should remain profitable in the long term. Additionally, the company is now financially stable after a long-term downward trend in revenue, which will continue to support its growth.
Last quarter, Coca-Cola beat its EPS and revenue estimates by 10.44% and 6.82%. The company’s quarterly revenue year-on-year rose 16.31% to $10.5 billion and its net profit rose 23.88% to $2.78 billion. Additionally, despite heavy losses due to the coronavirus pandemic and resulting supply chain issues, the company has recovered in almost every aspect. Therefore, I expect KO to be a safe stock to hold for the long term.
Safest stocks to buy: Flowers Foods, Inc. (FLO)
Flowers Foods, Inc. (NYSE:FLO) is a bakery products company. FLO is among the safest stocks and has continued its long-term uptrend, despite multiple declines.
Flowers Foods also has strong finances and has not suffered major losses. In the current market downturn, FLO stock has maintained its uptrend and the company’s finances have remained stable.
Flowers Foods reported quarterly revenue growth of 10.27% to $1.44 billion and net income rose 19.4% to $85.6 million in the latest quarter. Additionally, the company also beat its earnings estimate by 15.79% and recently increased its dividend by 22 cents per share. Thus, FLO is likely to remain a safe stock due to its stable finances.
PepsiCo, Inc. (PEP)
PepsiCo, Inc. (NASDAQ:DYNAMISM) is a company similar to Coca-Cola. However, PEP’s stock has always been more stable than KO’s, and PepsiCo’s profitability is significantly higher.
This quarter, PepsiCo posted robust growth, with its year-over-year quarterly net profit and revenue increasing 148.6% and 9.31%, respectively. Additionally, the stock has not been much affected by recent market volatility and has continued its long-term uptrend.
Even in a recession, PepsiCo products will remain in high demand. The brand is important and the business should remain profitable for the foreseeable future.
The safest stocks to buy: McDonald’s Corporation (MCD)
McDonald’s Corporation (NYSE:MCD) is a no-brainer when it comes to safe stocks. MCD stock is one of the most resilient to market volatility and recessions. Even during the Great Recession, the stock rose 7% and the company’s finances prospered.
Even more surprisingly, McDonald’s has recovered quickly from the coronavirus recession, which has hit restaurants particularly hard. Additionally, the company reversed its downward trend in revenue post-pandemic.
Admittedly, the last quarter was not the company’s strongest. However, McDonald’s still managed to exceed profit expectations. Given the historical performance, MCD stock should continue its long-term uptrend.
At the date of publication, Omor Ibne Ehsan did not hold (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.