Best Low-Risk Stocks

Best Low-Risk Stocks

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There are many various ways to describe risk, but in finance, it refers to the probability that a return on investment would be lower than projected.

However, there are several types of risk, such as investment risk, market risk, inflation risk, company risk, and liquidity risk, to name a few. People, businesses, and governments all face the possibility of losing part or all their investments.

An investor's willingness to take some degree of risk to get a return on their investment is known as risk tolerance. An investor's risk tolerance is the amount of risk they are prepared to take on when they decide on an investment, and this is often decided by factors such as their age and available cash flow.

Business and investment are the most common examples of risk, but it is equally relevant in macroeconomic contexts. Some types of risk, such as inflation, market dynamics, and consumer preferences, investigate how investments, nations, and enterprises are affected by these factors.

For investment purposes, the standard deviation equation (often used in statistics) serves as a risk indicator, which is a natural choice. Using this formula, you can determine how volatile a stock is relative to its average price.

There is a direct correlation between stock or security volatility and the anticipated return on investment (ROI), and ROI is inversely proportional to stock or security volatility (SD).

Investing in low-risk equities often results in lower returns because of the lower volatility of their prices. Risky investments, on the other hand, are known to experience large price fluctuations and large potential profits. Because of their more hazardous nature, investors are incurring a greater risk of losing money on their investments.

The investor's time horizon is an important consideration when assessing the risk in their investment portfolio. The investor's time horizon is the amount of time they have available to invest.

If the investor has a long-term horizon, they can typically invest in higher-risk companies since they have more time to ride out any falls in the market. Investors need to go for lower-risk investments if their time horizon is limited.

Because of a spreading pandemic and widespread unemployment, investors are growing warier about taking on further risks. Investing in low-risk companies is an excellent strategy in these instances.

 The downside is that most of these companies have a limited amount of upside potential and may not be able to achieve an investor's long-term financial objectives. However, the reality is that no investment is ever completely risk-free, making these equities a challenging investment.

Some of the best low-risk stocks right now are:

1. T-Mobile US, Inc.

2. Johnson & Johnson

3. Merck & Co., Inc.

4. Bristol-Myers Squibb Company

5. The Procter & Gamble Company

6. Verizon Communications, Inc.

7. General Mills, Inc.

8. The J. M. Smucker Company

9. Kellogg Company

10. Hormel Foods Corporation 

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1. T-Mobile US, Inc. (NASDAQ: TMUS)

Market Capitalization: $156.7 Billion

Price: $125.44

Number of Hedge Fund Holders: 100

52-week Range: $101.51 – $150.20

T-Mobile US, Inc. is a cellular telecommunications service provider based in the United States. Post-paid, prepaid, and wholesale consumers may all use the company's cellular services.

Additionally, it offers a wide range of wireless devices and accessories to these clients. T-Mobile, Metro by T-Mobile, and Sprint are among the company's most well-known brands.

In addition, the company offers products and services under all three of those names via its own retail locations, as well as online and mobile apps and websites.

It also offers gadgets to third-party distributors and retailers for re-sale via independent third-party retail shops and several third-party websites, such as Amazon. When comparing it to other companies, T-Mobile US, Inc. is one of the world's biggest telecommunications providers.

It is a popular choice for hedge funds and is in the top 20 most preferred companies. After lowering the price objective to $160 from $170, Wells Fargo analyst Eric Luebchow maintained an Overweight rating and said investors should take advantage of a cheaper price point to get in on the action.

An announcement made by T-Mobile US recently said that it would be extending its cooperation with Walmart to include both retail and online locations. The footprint of T-Mobile will be increased.

Greenwich-based investment company Viking Global owns 7.5 million shares valued at more than $1 billion among the hedge funds monitored today. 

2. Johnson & Johnson (NYSE: JNJ)

Market Capitalization: $451.51

Price: $171.51

Number of Hedge Fund Holders: 88

52-week Range: $151.47 – $179.92

Johnson & Johnson is a holding corporation that manufactures, markets, and distributes a wide variety of healthcare goods. The company has three divisions: Consumer, Pharmaceutical, and Medical Devices, each of which works independently.

Its major emphasis is on health and well-being items for humans. Cosmetics, dental care, infant care, women's health, and wound care items are all part of the Consumer segment's offerings.

There are six main areas of concentration in the pharmaceutical sector: immunology, infectious illnesses, neurology and cancer, cardiovascular, metabolic, and pulmonary hypertension.

Interventional solutions, orthopedics, surgery, and optical devices all fall under this category. Johnson & Johnson and Moderna (NYSE: MA) both developed COVID-19 booster injections that received US FDA clearance on October 21.

A quarterly dividend of $1.06 per share was announced by the corporation on the same day. The yield on the futures contract was 2.6%. A medicine developed by Johnson & Johnson to treat pulmonary arterial hypertension, OPSYNVI, received Canadian regulatory clearance on October 15th.

Johnson & Johnson had $7 billion in hedge fund holdings when the second quarter of 2023 ended, showing an increase from $6.9 billion at the end of the previous quarter. 

3. Merck & Co., Inc. (NYSE: MRK)

Market Capitalization: $194.27 Billion

Price: $76.91

Number of Hedge Fund Holders: 79

52-week Range: $70.89 – $91.40

Pharmaceutical giant Merck & Co is based in New Jersey. Prescription drugs, vaccines, biological treatments, and animal healthcare products are all offered by the company. It has two divisions: pharmaceutical and animal health.

The Company's Pharmaceutical sector comprises human health pharmaceuticals as well as a wide range of vaccination products.

Its pharmaceuticals for human health include therapeutics and preventatives for the treatment of human illnesses, which are often marketed based on a prescription.

Among its long list of clients, drug wholesalers and retailers, hospitals, government agencies, and managed health care providers are the primary customers of these human health pharmaceutical items produced by Merck & Co., Inc.

The Animal Health division develops, produces, and distributes a comprehensive variety of veterinary pharmaceutical and vaccination products in addition to health management solutions and services.

This works to prevent, treat, and control illness in all major livestock and companion animal species. The share price objective of Merck & Co., Inc was increased from $105 to $104 on October 22, 2023, following a financial advisory from SVB Leerink.

Washington-based investment company Fisher Asset Management has more than $802 million worth of shares in Merck & Co., Inc. In addition, Merck & Co., Inc. was one of the stocks included in Artisan Partners' Q1 2023 investor letter. 

4. Bristol-Myers Squibb Company (NYSE: BMY)

Market Capitalization: $146.25 Billion

Price: $65.89

Number of Hedge Fund Holders: 73

52-week Range: $53.22 – $69.75

The biopharmaceutical corporation Bristol-Myers Squibb is based in New Jersey. Biopharmaceutical products are discovered, developed, licensed, manufactured, distributed, and sold by the company.

Among the therapeutic areas served by its products are cancer, immunology, cardiology, and fibrosis. Small molecule medications and biologics, the latter of which are derived from biological processes, are among the pharmaceuticals developed by the company.

Oral administration of small molecule medications is done via the use of a pill or tablet. Injections and intravenous infusions are the most common methods of administering biologics.

Wholesalers, distributors, pharmacies, merchants, hospitals, clinics, and government organizations all buy its goods. For the third quarter, the firm just reported profits of $2 per share, exceeding market expectations by $0.08. Revenue for the quarter was $11.6 billion, an increase of 10% year-on-year and $100 million better than the market had expected.

Furthermore, in the release of its results, the company boosted its fiscal year 2019 projection figures for the first time.

Bristol-Myers Squibb Company had 73 hedge funds in its database when the second quarter of 2023 ended, with holdings worth $4.5 billion, down from 81 funds with interests worth $5.7 billion in the previous quarter. 

5. Procter & Gamble Company (NYSE: PG)

Market Capitalization: $383.43 Billion

Price: $159.96

Number of Hedge Fund Holders: 68

52-week Range: $121.54 – $165.35

In 1837, William Procter and James Gamble established the Procter & Gamble Company (P&G), an American international consumer products conglomerate with its headquarters in Cincinnati, Ohio.

These items are categorized into numerous categories, including Beauty, Grooming, Health Care, Fabric & Home Care, and Baby, Feminine & Family Care. This company focuses on a wide variety of personal health and consumer health products.

Customers can easily find the company's goods in mass merchandisers, grocery shops, membership clubs, pharmacy stores, and a variety of others in many nations and territories.

The shares of Procter & Gamble Company have a long track record of reliability. A quarterly dividend of $0.8698 per share was issued by The Procter & Gamble Company on October 20, in line with previous dividend payments.

In addition, the company's first fiscal quarter earnings figures released a day earlier surpassed market forecasts by $0.02 on profits per share. Cedar Rock Capital, a London-based investment company, has more than $1 billion worth in shares with Procter & Gamble Company, translating to 7.5 million shares.

6. Verizon Communications, Inc. (NYSE: VZ)

Market Capitalization: $221.7 Billion

Price: $52.82

Number of Hedge Fund Holders: 63

52-week Range: $49.69 – $59.84

Communications conglomerate Verizon Communications Inc. is a component of the Dow Jones Industrial Average and an American global telecommunications company.

Communications, information, and entertainment goods and services are provided by the Company's subsidiaries to consumers, companies, and government organizations.

The Verizon Consumer Group and the Verizon Business Group are the two parts of Verizon that may be reported. Communications services are offered via the company's Consumer section.

Verizon Communications Inc. is one of the better choices because the operations of the corporation are solid, and it consistently generates profits.

The Naval District Washington has awarded Verizon Communications Inc. a $78 million task order. In addition, Amazon and Verizon are working together to improve connectivity in outlying parts of the United States.

In the second quarter of 2023, 63 hedge funds in the Insider Monkey database owned holdings in Verizon Communications Inc. worth $10.9 billion, down from 69 funds worth $11.3 billion in the previous quarter. 

7. General Mills, Inc. (NYSE: GIS)

Market Capitalization: $41.27 Billion

Price: $68.43

Number of Hedge Fund Holders: 37

52-week Range: $54.31 – $69.95

Foods offered in retail outlets are manufactured and distributed by General Mills, Inc. Branded and unbranded food items are supplied by the Company to the North American restaurant and commercial banking sectors.

Natural pet food is also produced and sold by this company. Convenience Stores & Foodservice; Europe & Australia; Asia & Latin America; and Pet are all sectors of the company.

General Mills, Inc. reported profits per share of $0.99 for the first fiscal quarter, exceeding expectations by a penny. General Mills, Inc. has experienced a 4% growth year-over-year in total revenue, amounting to $4.5 billion.

A quarterly dividend of $0.51 per share was also announced by the corporation, which has a long history of paying out dividends.

It is projected that General Mills, Inc. would gain from the recent market defensive posture and the good food company valuations. A decrease in Treasury rates is also a factor in the company's net-positive outlook.

The largest stakeholder in General Mills, Inc. is the New York-based hedge fund Renaissance Technologies, with a stake of over $226 million, equating to 3.7 million shares. 

8. The J. M. Smucker Company (NYSE: SJM)

Market Capitalization: $14.7 Billion

Price: $136.49

Number of Hedge Fund Holders: 34

52-week Range: $111.59 – $145.82

In North America, the J. M. Smucker Company is a major food company. The firm, which has its headquarters in Orrville, Ohio, was established in 1897 as a producer of apple butter. Retail Pet Foods, Retail Coffee, and Retail Consumer Foods are all divisions of the company.

Customers may choose from a wide range of items from coffee to pet food to peanut butter to fruit spreads to frozen snack items to portion control to baking supplies and baking mixes.

The food business has been gripped by inflation fears recently, even though the company's second-quarter profits per share and sales are above market estimates.

Mark Smucker, the company's CEO, said in late August that pandemic-related inflation has resulted in compression on margins. Despite this, experts expect the stock to do well in the months to come due to the firm's solid fundamentals.

Bryan Spillane, a Bank of America analyst, has a Neutral rating and a $140 price objective on The J. M. Smucker Company shares.

9. Kellogg Company (NYSE: K)

Market Capitalization: $21.04 Billion 

Price: $61.70

Number of Hedge Fund Holders: 32

52-week Range: $56.61 – $68.55

Kellogg's, an American global food manufacturing firm based in the United States, is the Kellogg Company Kellogg's brand. Consumer packaged goods giant Kellogg is known for its savory and sweet cereals, as well as a variety of snack foods and drinks.

Toaster pastries, cereal bars, granola bars, and nibbles are only some of the company's most popular snacks, as well as convenience meals, including frozen waffles, vegetable dishes, and noodles.

Europe, which comprises mostly of European nations; Latin America, including Central and South America, as well as Mexico.

In addition, there is also Asia Middle East Africa (AMEA), encompassing a wide range of markets in the Middle East as well as the Asia-Pacific region. For the third quarter in a row, the company announced a dividend of $0.58 per share, with a forward yield of $3.78.

According to data released by Kellogg Co. in August of 2023, quarterly profits per share were $1.14, above projections by $0.11. During the same period, sales totaled $3.5 billion, indicating a $120 million improvement over forecasts.

Just as in the second quarter of the previous year, a total of 32 hedge funds had $482 million invested in Kellogg Company as of June 30, 2023. 

10. Hormel Foods Corporation (NYSE: HRL)

Market Capitalization: $25.81 Billion

Price: $47.58

Number of Hedge Fund Holders: 24

52-week Range: 

Hormel Foods Corporation is a meat and food manufacturing company. Hormel Foods International Corporation (HFI), which produces, promotes, and distributes the Company's goods overseas, is one of the four sectors of the company's business.

Grocery Products and Refrigerated Foods are the other two businesses. NUT-rition is another one of the company's products, as are the Cheese Ball Planters and Corn Nut Planters brands.

One of the safest companies to invest in right now is Hormel Foods Corporation, with a long and outstanding dividend history. A quarterly dividend of $0.245 per share was announced by the company at the end of September, keeping pace with prior declarations.

The yield on the futures contract was 2.39%. It was recently reported that the business that sells meat products would be joining another meat company to bring a new plant-based meat product to market.

Thomas Palmer, a JPMorgan analyst, has raised Hormel Foods Corporation shares to Neutral from Underweight with a price objective of $42 based on recent pricing hikes in the industry.

24 hedge funds had $562 million invested in Hormel Foods Corporation by the end of the second quarter in 2023, down from 26 the previous quarter with $483 million.

Examples of Other Low-Risk Stocks

Apart from those already mentioned, the following are ideal examples of the best low-risk stocks:

1. Vanguard High-Dividend Yield ETF (NYSEMKT: VYM)

2. Vanguard Real Estate Index Fund (NYSEMKT: VNQ)

3. Starbucks (NASDAQ: BUX)

4. Apple (NASDAQ: AAPL)

1. Vanguard High-Dividend Yield ETF: The Vanguard High Dividend Yield ETF invests in a portfolio of companies that pay dividends that are higher than the industry average.

There are almost 400 equities in the fund's portfolio, including Johnson & Johnson, JPMorgan Chase, Bank of America, and several others.

There are several ways to gauge a company's financial health, and dividends are one of the best. Dividend-paying equities are also more stable than non-dividend-paying stocks during downturns.

2. Vanguard Real Estate Index Fund: Real estate is a good example of a long-term asset that does not carry a high degree of risk. Investors may acquire exposure to commercial assets such as office buildings, shopping malls, and apartment complexes via real estate investment trusts (REITs).

With a high dividend yield and a wide portfolio of real estate firms, the Vanguard Real Estate Index Fund may be a low-risk but high-reward option.

3. Starbucks: Because of its well-known brand and large customer base, Starbucks can demand higher prices than its competitors. Because of the economies of scale that come with having such a huge corporation, Starbucks can charge higher prices.

Since its founding in 1971, Starbucks has grown and income every year.

4. Apple: iPhone and Mac consumers prefer to stick with the company's goods, giving it a competitive edge overall due to their high level of customer loyalty and the company's ecosystem of interconnected devices.

This makes Apple one of the safest low-risk stocks on the market, as the brand continues to strive for excellence, winning over more customers and investors alike.

Which type of stock has the Lowest risk?

Large-cap companies and their shares are typically regarded to be safer and more conservative investments, while mid-capitalization and small-capitalization equities provide more potential for future development but are riskier.

Large-cap stocks are typically those of well-established corporations with a long track record in their markets. According to some, this makes them “safer” investments. Additionally, larger firm stocks often pay dividends, which allows you to collect a portion of your investment's return, which some investors regard as an advantage.

Rather than retaining earnings and reinvesting them, they may find that utilizing the cash benefits them more, and so they distribute it to shareholders.

What are the advantages of low-risk stocks?

The advantages of low-risk stocks are:

1. Steady Income

2. More Security

3. A Hedge against inflation

1. Steady Income: Investing in this sort of stock is a terrific method to protect the investor's money and earn regular dividends from a firm with a solid market foundation and few prospects for major changes soon. It is also possible to opt to sell them.

Low-risk investments include preferred stocks that have a typical dividend yield of approximately 2%. Utility stocks often offer a yield of around 3%. This includes investment trusts, fixed annuities, and mutual funds.

2. More Security: Investing in large firms has the benefit of reducing the risk that your money may lose value over time. This is crucial for anyone looking to make significant equity investments.

When it comes to investors, even bonds with lower dividend rates may still provide a good return. Some important market shifts and the danger of losing their investment are not as big of a concern for them.

3. A Hedge against inflation: Even if investors elect to put their money in a bank because of the interest rates offered, the main danger is inflation, which is a constant in most monetary systems.

Because investors can track inflation and keep their assets from depreciating, investing money is a much better option.

A 2% inflation rate combined with the investor's dividend payments of over 5%, for example, means that the investor will keep their initial investment and even make a profit. In addition, the share price will rise or fall with the inflation rate.

What are the disadvantages of low-risk stocks?

The disadvantages associated with low-risk stocks are:

1. There is a reduced chance for high rewards

2. Flexibility

1. There is a reduced chance for high rewards: When it comes to investing, the key distinction between high- and low-risk stocks relates to the potential returns.

While investing in high-risk stocks increases the risk of losing money, if investors do thorough research and locate the firms with the highest potential for market value growth, their riskier investment could provide a significant reward. 

Low-risk investments, on the other hand, carry the risk of receiving little money through dividends, and the stock prices of large firms may stay stable for an extended period. In such a situation, investors might lose even more due to inflation.

2. Flexibility: Traders who deal with stocks that carry a greater level of risk often purchase and sell such stocks and track market fluctuations to take advantage of those fluctuations. Investing in high-risk stocks offers the opportunity for profits over the short term, while safer options may leave investors with a small amount of capital, and no return, for an extended time.

What is the difference between Low-Risk and High-Risk?

Minimal-risk investments have a low probability of a catastrophic loss, whereas high-risk ones have a large probability of capital loss or underperformance.