Morningstar gives these stocks favorable ratings for stability.
Elevated inflation, a war in Ukraine and aggressive Federal Reserve interest rate hikes have made 2022 a stressful, unpredictable and volatile year on Wall Street. With the S&P 500 down 17% year to date through May 24, it’s understandable for investors to be looking to play it safer with their portfolios by buying high-quality, long-term investments that are stable and reliable. The Morningstar analyst team rates each stock on a five-point uncertainty scale from “low” to “extreme.” Here’s a list of eight safe stocks with low or medium Morningstar uncertainty ratings that investors can buy today to sleep easy at night.
Adobe Inc. (ticker: ADBE)
Adobe is a leading provider of creative content software, marketing automation and e-commerce applications. Analyst Dan Romanoff says the situation in Ukraine has weighed on Adobe’s 2022 guidance, but the company’s first-quarter revenue and net new digital recurring revenue numbers were solid. Adobe shares have been dragged down by the broad sell-off in tech growth stocks this year. Romanoff says Adobe’s stock was overvalued for much of 2021, but that it’s now attractively valued following a 40% pullback in the past six months. Morningstar has a “buy” rating and $615 fair value estimate for ADBE stock, which closed at $398.41 on May 24.
Comcast Corp. (CMCSA)
Comcast is a diversified media conglomerate that owns TV and movie assets and theme parks. Analyst Michael Hodel says investors should expect the company’s cable business to continue to slow, but Comcast shares are still “deeply undervalued.” Hodel says a prolonged period of steep customer losses is unlikely, and Comcast’s 262,000 net broadband customer additions in the first quarter are proof that the company’s customer base is still growing. In addition, he says, Comcast generates impressive cash flow and has a strong balance sheet. Morningstar has a “buy” rating and $60 fair value estimate for CMCSA stock, which closed at $43.07 on May 24.
Salesforce Inc. (CRM)
Salesforce is the market leader in customer relationship management software and is a top cloud computing services provider. In its most recent earnings call, Salesforce management said the messaging service Slack, which it acquired for $27 billion, is outperforming expectations. Management also said it has no more large acquisitions in the works and is focused on profitable growth, which Romanoff says is bullish for investors. He says the durability of Salesforce’s sales cloud revenue growth has been particularly impressive, and he believes Salesforce can continue to expand its margins. Morningstar has a “buy” rating and $320 fair value estimate for CRM stock, which closed at $156.93 on May 24.
Citigroup Inc. (C)
Citigroup is one of the largest U.S. banks and is one of the latest stocks Wall Street legend Warren Buffett has added to the Berkshire Hathaway Inc. (BRK.A, BRK.B) portfolio. Analyst Eric Compton says Buffett is on the right track, although Citigroup remains a complex investment as it navigates a major strategic shift. Citigroup is divesting a number of assets to streamline its business, including assets in Asia and Mexico. Compton says the restructuring will make Citigroup more focused and easier for investors to understand. Morningstar has a “buy” rating and $78 fair value estimate for C stock, which closed at $52.68 on May 24.
BlackRock Inc. (BLK)
BlackRock is the largest asset manager in the world, with $10 trillion in assets under management as of January 2022. Analyst Greggory Warren says the volatility in financial markets in 2022 has negatively impacted BlackRock’s AUM, but he says the firm is better positioned than competitors to navigate the volatility. After a 35% year-to-date sell-off, Warren says BlackRock is trading at a steep discount to its historical valuation and offering investors an attractive entry point into his top U.S.-based traditional asset manager stock pick. Morningstar has a “buy” rating and $880 fair value estimate for BLK stock, which closed at $618.35 on May 24.
ServiceNow Inc. (NOW)
ServiceNow provides software-as-a-service, or SaaS, applications used to manage and automate business processes and workflows. Romanoff says a steep sell-off in software stocks has made ServiceNow’s valuation more attractive. He says ServiceNow has opportunities to more deeply penetrate its existing information technology customers and expand its business by offering additional human resources and customer service products. In recent years, the world’s transition to a hybrid work environment has exposed the need for corporate infrastructure investment, and Romanoff says ServiceNow is perfectly positioned to capitalize on digital transformation investments. Morningstar has a “buy” rating and $700 fair value estimate for NOW stock, which closed at $437.52 on May 24.
Global Payments Inc. (GPN)
Global Payments provides payment technology and software to merchants and financial institutions. Analyst Brett Horn says Global Payments shares are undervalued, and he believes the market is skeptical of the company’s long-term growth prospects. Payment transactions dropped significantly during the COVID-19 pandemic, but Horn says Global Payments’ business held up relatively well considering its focus on small merchants. Revenue was up 8% in the first quarter, including 16% growth in acquiring-segment revenue. Adjusted operating margins also improved to 41.1%, up from 40.6% a year earlier. Morningstar has a “buy” rating and $186 price target for GPN stock, which closed at $122.86 on May 24.
Zimmer Biomet Holdings Inc. (ZBH)
Zimmer Biomet produces orthopedic and musculoskeletal implants. Analyst Debbie Wang says the omicron-variant wave of COVID-19 created noise in Zimmer’s first-quarter results, but she sees no evidence that underlying demand for the company’s products has meaningfully changed. U.S. knee-product sales were up 11.7% in the quarter, and hip-product sales rose 4.5% on a constant-currency basis. Wang says knee sales will continue to grow in the mid-single-digit percentage range throughout 2022 and return to pre-pandemic levels by the end of the year. Morningstar has a “buy” rating and $175 price target for ZBH stock, which closed at $119.39 on May 24.
Here are eight safe stocks to buy in a volatile market:
— Adobe Inc. (ADBE)
— Comcast Corp. (CMCSA)
— Salesforce Inc. (CRM)
— Citigroup Inc. (C)
— BlackRock Inc. (BLK)
— ServiceNow Inc. (NOW)
— Global Payments Inc. (GPN)
— Zimmer Biomet Holdings Inc. (ZBH)
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8 Safe Stocks to Buy in a Volatile Market originally appeared on usnews.com
