The current short-term recovery has put the stock market at a crucial point. Many stocks have been devastated by recent selloffs and investors are still split on whether or not the market is in oversold territory yet. While some point to the Federal Reserve’s (Fed) planned interest rate hikes and call for a recession, others point to oversold stocks to justify another market rally.
Whatever it might be, it is clear that the stock market is currently highly volatile. There are unprecedented levels of uncertainty as the Fed has to battle both inflation and a contracting economy. Unlike in 2008 and 2020, the Fed cannot use quantitative easing to stimulate the economy. Doing so will only add more fuel to inflation. Therefore, the current situation is especially risky.
Of course, some sectors, such as tech, are certainly being hit harder. However, many stocks continue to be overvalued compared to the rest of the stock market and could still go lower. With that in mind, investing in safe and stable stocks is a good option.
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Thus, the following seven safest stocks are unlikely to be as volatile:
Costco Wholesale Corporation
Taiwan Semiconductor Manufacturing Company Limited
The Coca-Cola Company
Flowers Foods, Inc.
Safest Stocks to Buy: Costco (COST)
Costco (NASDAQ:COST) could be a bargain stock after its sharp selloff. The stock has likely bottomed out and could continue to go up due to its solid finances in the long run.
Costco has seen growth in both its revenue and net income this quarter. The company has also increased its net profit margin and earnings per share (EPS). Even though its price-to-earnings (P/E) ratio is still relatively high, the stock has performed exceptionally well in turbulent times. In addition, the company is in a stable long-term uptrend in its financials.
Moreover, Costco’s membership model has helped it combat inflation better than its competitors. Therefore, the current rebound of COST stock could be an excellent opportunity to get in on the stock.
Taiwan Semiconductor (TSM)
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Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) had a negative 33% selloff which has since cooled down significantly and the stock could be eyeing a rebound. The global shortage of semiconductors has led to the stock soaring by more than 200% after the pandemic. However, the recent selloff has likely dragged the stock below its intrinsic value.
Taiwan Semiconductor has reported robust financials this quarter. Year-over-year (YOY), quarterly revenue and net income grew at 35.5% and 45.13%, respectively. This is due to a high demand for semiconductors. Moreover, the net profit margin of Taiwan Semiconductor is also extraordinary at 41.28%, which grew by 7.11% this quarter.
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In addition, the semiconductor shortage is unlikely to be solved soon. Supply chain issues persist and the company will continue to profit from the high demand and increased prices for semiconductors. It is among the safest stocks due to its exceptional growth.
Safest Stocks to Buy: Broadcom Inc. (AVGO)
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Broadcom Inc. (NASDAQ:AVGO) is a company that manufactures and supplies a wide range of hardware and software products, including semiconductors.
The company’s stock has seen stable growth in the market with very little volatility. In addition, its financials are robust, with its YOY quarterly revenue and net income growing at 15.79% and 83.9%, respectively.
Moreover, the company has announced that it will be acquiring VMware, Inc. (NYSE:VMW) for $69.1 billion, signaling a secure financial position.
Nonetheless, investors should still be careful in the short-term as the VMware deal could add some volatility to the stock. However, AVGO is likely to remain among the safest stocks in the long-term.
Coca-Cola Company (KO)
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Coca-Cola (NYSE:KO) is one of the safest stocks to buy. The stock has always remained stable with very little volatility. Even in the current volatile market, KO stock has remained an outlier.
Furthermore, this household brand is unlikely to die out. Even in the worst-case scenario, Coca-Cola is likely to remain profitable in the long-term. Moreover, the company is now financially stable after a long-term downtrend in revenue, which will continue to aid its growth.
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In the latest quarter, Coca-Cola beat its EPS and revenue estimates by 10.44% and 6.82%. The company’s YOY quarterly revenue grew by 16.31% to $10.5 billion and its net income increased by 23.88% to $2.78 billion. In addition, despite heavy losses due to the coronavirus pandemic and the subsequent supply chain issues, the company has recovered in almost all aspects. Therefore, I expect KO to be a safe stock to hold long-term.
Safest Stocks to Buy: Flowers Foods, Inc. (FLO)
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Flowers Foods, Inc. (NYSE:FLO) is a bakery food company. FLO is among the safest stocks and has continued on a long-term uptrend, despite multiple downturns.
Flowers Foods also has solid financials and hasn’t had any significant losses. In the current market downturn, FLO stock has maintained its uptrend and the company’s financials remained stable.
Flowers Foods had a YOY quarterly revenue growth of 10.27% to $1.44 billion and its net income grew by 19.4% to $85.6 million in the latest quarter. Moreover, the company also beat its earnings estimates 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)
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PepsiCo, Inc. (NASDAQ:PEP) is a similar company to Coca-Cola. However, PEP stock has historically been more stable than KO and PepsiCo’s profitability is significantly higher.
This quarter, PepsiCo has delivered robust growth, with its YOY quarterly net income and revenue increasing by 148.6% and 9.31%, respectively. Moreover, the stock hasn’t been very affected by the recent market volatility and has continued on a long-term uptrend.
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Even during a recession, PepsiCo products will remain in high demand. The brand is a significant one and the company is likely to remain profitable for the foreseeable future.
Safest Stocks to Buy: McDonald’s Corporation (MCD)
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McDonald’s Corporation (NYSE:MCD) is a no-brainer when discussing safe stocks. MCD stock is one of the most resistant when it comes to volatile markets and recessions. Even during the Great Recession, the stock grew by 7% and the company’s financials flourished.
Even more surprisingly, McDonald’s quickly recovered from the coronavirus recession, which hit restaurants particularly hard. Moreover, the company reversed its revenue downtrend after the pandemic.
Admittedly, the latest quarter was not the company’s strongest. However, McDonald’s still managed to beat earnings expectations. With historical performance in mind, MCD stock is likely to continue on a long-term uptrend.
On the date of publication, Omor Ibne Ehsan 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.com Publishing Guidelines.
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