When it comes to the economy and the stock market, the near term remains murky. It’s possible the market has mostly factored in inflation, interest rate hikes and recession risks. Then again, maybe not. Yet while uncertainty still runs high, that doesn’t mean staying on the sidelines is the best move. Instead, it’s best to seize opportunities, like A-rated safe stocks to buy.
Of course, risky stocks have been hard hit so far this year, but so have their less-risky counterparts. In fact, in some cases, safe, high-quality names have become oversold. Because those stocks are trading at very favorable valuations, now is a great time to lock down long-term positions.
Yes, the market could stay rocky through the rest of the year. Volatility could even carry on into 2023. However, with safe, high-quality stocks, further near-term downside risk is limited. On a longer time frame, each one offers solid upside potential.
So, what are the best safe stocks to buy today? Consider these seven. Each one earns an A rating in my Portfolio Grader.
| AA | Alcoa | $52.98 |
| DLTR | Dollar Tree | $165.99 |
| ENPH | Enphase Energy | $303.87 |
| MRO | Marathon Oil | $22.30 |
| ON | ON Semiconductor | $66.16 |
| PEP | PepsiCo | $176.05 |
| ZIM | ZIM Integrated Shipping | $52.24 |
Alcoa (AA)
Like other commodity stocks, shares in Alcoa (NYSE:AA) soared earlier this year. Russia’s invasion of Ukraine, and the subsequent economic sanctions placed on Russia, resulted in a big spike in aluminum prices and, in turn, a spike in aluminum stock prices.
However, since the spring, aluminum prices have pulled back considerably. That’s when worries about falling demand (from a recession) began to outweigh the impact of tightening supply. Investor sentiment with AA stock has done a 180. After trading for as much as $98.09 per share, it’s fallen nearly 50% to just over $50 per share
But while it’s experienced a big plunge, further volatility may be limited. With its drop, Alcoa now trades at a highly discounted valuation (6.1x estimated 2022 earnings). As aluminum prices remain at multiyear highs, the company remains well-positioned to continue reporting strong earnings results.
Alcoa earns an A rating in my Portfolio Grader.
Dollar Tree (DLTR)
It’s not surprising that Dollar Tree (NASDAQ:DLTR) shares are in the green for 2022, while the market at large is in the red. This discount retailer is both inflation-resistant and recession-resistant. Inflationary pressures have not had nearly the impact on discount retailers’ operating results as they have had on the results of big-box retailers.
Challenging economic conditions have helped to increase traffic to Dollar Tree’s stores, as seen from its same-store sales growth last quarter (4.4%). Continuing to deliver strong earnings growth, the nearly 20% rise in the price of DLTR stock since January is justified.
Even with this surge, don’t think you’ve missed out. At 20.3x earnings, it’s still favorably priced relative to its future prospects. Able to pass along rising costs to consumers, all while offering a strong value proposition for consumers squeezed by inflation, its operating results should remain strong going forward.
This stock earns an A rating in my Portfolio Grader.
Enphase Energy (ENPH)
Enphase Energy (NASDAQ:ENPH) may seem like an odd choice to include on a list of safe stocks to buy. High-growth names like this maker of solar energy inverters and battery storage products are not typically considered safe stocks.
Sure, ENPH stock has made wild moves since late last year. After its most recent rally, it now sports a premium valuation (83.3x earnings). Yet while this may make buying it today look like a speculative wager, shares aren’t as risky as they appear.
Why? Trends are highly in Enphase’s favor. It’s experiencing strong demand in Europe, as solar use grows due to high energy prices. The climate bill making its way through Congress right now could also be a boon for its business. As prospects remain very bright, this stock (up 65% this year) could keep climbing.
This stock earns an A rating in my Portfolio Grader.
Marathon Oil (MRO)
Green energy plays may have performed strongly lately, but 2022 has been a great year for fossil fuel stocks as well. For instance, Marathon Oil (NYSE:MRO), which is up more than 30% year to date thanks to the massive spike in crude oil and natural gas prices.
Yes, with crude oil falling back below $100 per barrel, MRO stock, like its exploration and production peers, has fallen back as well. However, far from a potential falling knife situation, you may want to consider buying shares after their recent dip.
Crude oil prices could hold steady at current levels through 2023. At least, that’s what the U.S. Energy Information Administration (or EIA) is forecasting. Assuming oil stays elevated compared to prior-year levels, Marathon earnings will stay elevated as well. This will allow it to continue its aggressive stock buyback program, which could move the needle further for shares.
This stock earns an A rating in my Portfolio Grader.
ON Semiconductor (ON)
ON Semiconductor (NASDAQ:ON) is a safe stock that the market has been overly cautious about. This maker of semiconductors for the auto industry and other industrial end-users has benefited from demand for chips outstripping supply. Last quarter, revenue was up 25% year over year (or YOY). Earnings more than doubled.
Still, it’s future results that are top of mind with investors when it comes to ON stock. Anticipating lower demand in a recession, shares trade at a low multiple (12.39 earnings), despite the recent growth.
However, it’s hardly a given that demand is on the verge of slacking. Add in the potential benefits from the recently passed CHIPS Act (which provides billions in subsidies for domestic chip makers), and the good times are likely to keep on rolling for ON Semiconductor.
This stock earns an A rating in my Portfolio Grader.
PepsiCo (PEP)
It’s not difficult to see why PepsiCo (NASDAQ:PEP) belongs in the safe stocks to buy category. It’s the type of business that performs well in good economic times and in bad economic times.
The beverage and snack foods giant also has been able to pass along rising costs to consumers, all while continuing to report organic sales growth. In this year’s down market, PEP stock has held steady. At present, it trades for basically what it traded for at the start of 2022.
Once today’s choppy market conditions pass, PepsiCo will likely get back on track delivering solid returns to investors. Shares will continue to move up in tandem with increased earnings. Add in the stock’s dividend (forward yield of 2.64%), which has been raised 49 years in a row, and buy and hold investors could see satisfactory total returns from adding it to their portfolios.
This stock earns an A rating in my Portfolio Grader.
ZIM Integrated Shipping Services (ZIM)
With high expectations of an upcoming recession, cyclical stocks have fallen to super-low valuations. Few, however, have fallen to the fire-sale valuation ZIM Integrated Shipping Services (NYSE:ZIM) currently commands.
Currently, it trades for just 1.1x estimated 2022 earnings. Even when comparing its stock price to 2023 earnings forecasts, which call for its earnings to fall by more than 64%, its earnings multiple is extremely low (3.3x). It’s not as if things are set to go from boom to bust for this containership company, which has benefited greatly from the supply chain crisis.
Container shipping rates are declining, but they are not experiencing a precipitous plunge. Earnings could remain very high compared to pre-2021 levels. Put simply, pardon the pun when I say the ship hasn’t sailed with ZIM stock.
This stock earns an A rating in my Portfolio Grader.
On the date of publication, Louis Navellier had a long position in AA, ENPH, MRO, ON, PEP and ZIM. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.