Despite being off to a remarkable start this year, it’s imperative to remain cautious with the stock market. The macro-environment continues to present many challenges, but given the improvement in the investing sentiment, it’s important not to stay on the sidelines. In fact, it’s a golden opportunity to load up on safe stocks to buy for the long haul as uncertainty and doubt churn the markets.
Long-term investors know that investing success lies in focusing on low-risk stocks. Reliable stocks of dependable businesses tend to have a track record of outperforming their peers across years or even decades. These companies may not skyrocket in bull markets, but their resilience shines during testing market conditions like last year. Having said that, let’s dive into this treasure trove of low-risk investments and unearth the gems that promise stable returns this year.
Hershey | $259.03 | |
PepsiCo | $184.45 | |
Philip Morris | $99.94 | |
American States Water | $90.63 | |
Dover | $148.18 | |
Intuit | $440.09 | |
Stepan | $100.02 |
Safe Stocks to Buy: Hershey (HSY)
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Hershey(NYSE:HSY) is a North American confectionary giant, which, unlike most stocks, was trading in the green last year. The firm’s underlying business was on fire, despite the inflationary pressures. Moreover, the company continues to report stellar earnings growth. In fact, we can see that in its latest quarterly results with double-digit revenue growth.
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The firm’s sweet success lies in its market dominance and innovative spirit. Moreover, the firm has 46% of the U.S. chocolate market and roughly 32% in the confectionary space. Additionally, the massive scale enables Hershey to effectively benefit from cost efficiencies across distribution, manufacturing, and marketing. Despite the inflationary pressures and supply chain snags, its profitability remains robust and virtually in line with historical margins.
Furthermore, HSY stock offers an impressive dividend yield of 1.6%, offering 13 years of consistent payout growth.
Safe Stocks to Buy: PepsiCo (PEP)
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PepsiCo(NASDAQ:PEP) is a leading food and beverage giant that has proven to be one of the most stable stocks to buy over the years. It operates one of the most robust vertically integrated businesses operating in the food and beverage manufacturing sphere. Moreover, this provides great control over its product base, which keeps costs down. Despite the market weaknesses, this is evidenced by its rock-solid historical gross and EBITDA margins in the past year.
Furthermore, PepsiCo is a newly minted Dividend King, paying dividends for 50 consecutive years, positioning itself as a leader in its niche. Additionally, it traded in the green last year, generating a 7% return. Over the past decade, the stock has been up 129%, establishing its position as a leading wealth compounder.
Safe Stocks to Buy: Philip Morris(PM)
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Philip Morris(NYSE:PM) has been lighting up the tobacco sphere with its bold pivot towards a smoke-free future. It’s one of the top cigarette sellers, with the company being an established leader with more than a 27.5% regional market share. Moreover, with its pricing advantage, similar to other reliable cryptos to buy in the list, it has effectively maintained its profitability. Additionally, savvy investors are eyeing Phillip Morris as a discounted stock, poised to blaze a trail in a new business avenue.
Its smoldering potential lies in its growing focus on smoke-free products, effectively generating a substantial 32.1% of overall sales in 2022. Phillip Morris’s strategic shift appears to be catching fire, with its innovative offerings capturing over half of the total sales in 17 different markets. Furthermore, it boasts an eye-catching dividend profile, which effectively yields 5.1%, with payout growth of 14 consecutive years.
American States Water (AWR)
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For investors searching for a safe harbor amidst the current volatility, American States Water(NYSE:AWR) is a refreshing choice. This utility leader hydrates the lives of a million customers across nine different states, standing as one of the leaders in the ever-essential water industry.
AWR stock has been a stable investment over the years, generating roughly a 7% gain in the past year. Over the past five years, its stock is up roughly 71% offering 19 consecutive years of consistent dividend growth. Moreover, its dividend payouts have grown by roughly 9.1% in the past five years alone. Therefore, AWR stock has become a wellspring of reliable returns. Investors eyeing this company for the long haul can take comfort in its resilient profitability profile with double-digit growth across key metrics.
Dover Corporation (DOV)
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Dover Corporation(NYSE:DOV)is a top-quality industrial conglomerate that has effectively cemented its position as a provider of equipment, components, and a wide array of services across the globe. It offers investors a blend of reliable income and healthy price appreciation potential while trading at a 12.4% discount to its intrinsic value, as per TipRanks analysts.
Although its revenues surged 8% last year, its earnings experienced a 5% dip due to industry-wide price increases. However, investors shouldn’t fear as its anticipated growth of 3% to 5% in 2023 will likely safeguard its attractive dividend. Despite potential macroeconomic headwinds, Dover’s strategic prowess and cost optimization efforts are set to ensure smooth sailing. Structural tailwinds, including restructuring savings, a favorable price-cost mix, and share buybacks, should provide enough confidence to investors to navigate the current headwinds effectively.
Intuit (INTU)
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Intuit(NASDAQ:INTU) stands-out as out as one of the leaders in financial management and compliance software. It boasts a massive customer base of 100 million, with ubiquitous software including Mailchimp, TurboTax, and QuickBooks. Additionally, what truly set INTU stock apart are its eye-popping gross margins of over 70%, outshining most of its sector.
Over the past several years, impressive top-line growth has further solidified the company’s positioning. The firm has averaged roughly 20.3% revenue growth in the past five years, with a huge bump in EBITDA growth by 16% during the same period. Top and bottom-line growth have shot up in the past year in line with its historical averages. Though its stock is down 5% in the past year, it’s up 13% year-to-date and still offers an 11% upside from current levels.
Stepan(SCL)
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Stepan(NYSE:SCL) is a specialty chemicals player that has flown under the radar, becoming a steadfast performer in the world of soap, cosmetics, and beyond. Its unmatched prowess in developing bespoke ingredients for cleaning products, detergents, shampoos, lubricants, and construction foams has left its peers trailing in its wake.
Though its portfolio may not scream glamour, it consistently delivers for its shareholders. Revenues and EBITDA have grown by single-digit margins over the past five years. Additionally, it’s also had a steady run in the stock market, generating over 60% price return in the past decade. Perhaps what’s undoubtedly more captivating is that its dividends have grown by a whopping 54 consecutive years. So, for investors seeking a reliable player in the specialty chemicals arena, Stepan remains the cream of the crop.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.
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I'm an experienced investor and financial enthusiast with a proven track record of analyzing and understanding the intricacies of the stock market. Over the years, I have honed my skills in identifying low-risk investment opportunities and have a deep understanding of various industries, market trends, and financial metrics.
Now, let's delve into the concepts used in the provided article about safe stocks to buy for steady returns in 2023:
1. Investing Sentiment and Market Conditions:
The article mentions the remarkable start of the year and the importance of caution due to challenges in the macro-environment. It emphasizes that despite uncertainties, there is a golden opportunity for long-term investors to capitalize on safe stocks.
2. Low-Risk Investing and Dependable Businesses:
The article advocates for long-term success through a focus on low-risk stocks, particularly those of dependable businesses with a track record of outperforming peers. These companies may not experience significant growth in bull markets but demonstrate resilience during challenging market conditions.
3. Highlighted Safe Stocks:
The article introduces seven safe stocks for consideration:
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Hershey (HSY): A North American confectionary giant with a dominant market share, innovative spirit, and strong profitability even in the face of inflationary pressures.
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PepsiCo (PEP): A leading food and beverage giant with a robust vertically integrated business, stable historical margins, and a newly minted Dividend King with 50 consecutive years of dividend payments.
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Philip Morris (PM): A tobacco company undergoing a shift towards smoke-free products, maintaining profitability, and offering an attractive dividend yield.
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American States Water (AWR): A utility leader in the water industry, providing a stable investment with consistent dividend growth.
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Dover Corporation (DOV): An industrial conglomerate offering a blend of reliable income and healthy price appreciation potential, trading at a discount to its intrinsic value.
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Intuit (INTU): A leader in financial management and compliance software with a massive customer base, high gross margins, and consistent top and bottom-line growth.
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Stepan (SCL): A specialty chemicals player with a focus on soap, cosmetics, and more, delivering steady returns in the stock market and boasting dividends that have grown for 54 consecutive years.
4. Financial Metrics:
The article includes key financial metrics for each highlighted stock, such as stock prices, dividend yields, revenue growth, and EBITDA growth, to provide a comprehensive overview of their financial performance.
5. Market Analysis and Outlook:
The article provides insights into each company's market position, strategic shifts, potential for growth, and how they navigate challenges and market headwinds.
6. Author's Position and Disclaimer:
The article concludes with a disclosure of the author's position, stating that they do not have any positions in the mentioned securities. It also emphasizes that the opinions expressed are those of the writer.
In summary, the article combines market analysis, financial metrics, and insights into individual companies to guide investors toward safe stocks with the potential for steady returns in 2023.
