There’s growing concern that the economic recovery could falter this winter if Covid-19 cases spike dramatically. Those concerns are not just being felt in the U.S. but all over the world, leaving investors to start hunting for safe stocks to buy.
The Organization for Economic Co-operation and Development (OECD) recently lowered its growth forecast for the U.S. economy in 2021 to 6% from the 6.9% it had estimated in the spring and trimmed its forecast for global economic growth to 5.7% from 5.8% previously.
At the same time, other influential institutions ranging from the International Monetary Fund to the European Central Bank continue to sound the alarm on issues likely to impact the global economy, from rising inflation and loose monetary stimulus to supply constraints and the ongoing shortage of semiconductors.
With concerns rising that the economic recovery is losing momentum, we look at three of the best safe stocks to buy now.
Safe Stocks to Buy: Berkshire Hathaway (BRK.B)
The holding company of legendary investor Warren Buffett is one of the most stable and reliable investments around. In good times and bad, Berkshire Hathaway manages to provide consistent and steady returns to shareholders. You’ll want to own the more affordable Class B shares though as the Class A stock is currently trading at more than $430,000 per share (Buffett has never split the stock). At $286 a share, the Class B shares are affordable and profitable. In the past five years, BRK.B stock has gained 98% in value. In the past 25 years, the shares have risen 1,085%.
And while Berkshire Hathaway’s stock does not pay a dividend, they are a great long-term investment for investors young and old. As a holding company, Berkshire owns a range of well-known businesses — from the Dairy Queen restaurant chain to Geico insurance and the Fruit of the Loom clothing company.
Berkshire Hathaway also has a vast and well diversified portfolio of blue-chip stock holdings. The company is one of the largest shareholders of Apple (NASDAQ:AAPL), Coca-Cola (NYSE:KO) and Bank of America (NYSE:BAC). Berkshire’s stock holdings are currently worth more than $325 billion and growing. BRK.B is a buy and hold forever stock.
Costco (COST)
No matter what happens with the economy, people will still need to eat. And when it comes to groceries, Costco is king. Stock of the popular warehouse club has risen 28% over the last six months and is up 220% in the past five years. COST stock has continued to trend higher throughout the pandemic. Covid-19 variants and lockdown measures come and go, but Costco’s share price keeps on rising.
And Wall Street remains bullish, with a median price target on the stock of $500, implying a further 11% gain from current levels. Speculation is growing that Costco’s stock could split before year’s end as it continues to reach new highs.
Costco, which today has just over 800 store locations around the world, continues to post impressive financial results and growth metrics. For all of 2020, Costco’s total sales grew 7.7% from a year earlier, while its e-commerce or online sales rose 50% over the previous year. The company’s membership renewal rate is also the envy of the retailing world at 89% globally.
The average purchase made by a Costco member increased by nearly 6% in the last 12 months. Bottom line is that Costco is the gold standard when it comes to grocery retailers. In uncertain times, COST stock is a bedrock investment that people can count on.
Safe Stocks to Buy: Amazon (AMZN)
If we find ourselves back in widespread lockdowns and the economy tanks, investors will want to own stock of online retail behemoth Amazon. In many ways, Amazon has been the company that carried us through the pandemic. With brick-and-mortar retailers forced to close, the world turned to Amazon for online orders ranging from toilet paper to laptop computers.
There’s literally nothing people can’t get online from Amazon today, and the company continues to aggressively expand around the world, adding new warehouses and employees, as well as experimenting with new technologies such as drone deliveries and electric delivery trucks.
The good news is that Amazon stock is on sale right now. Up just 3% in the last six months, AMZN stock is now trading at $3,435. The Seattle-based company’s share price has cooled off after a red-hot gain of 83% in 2020. But it likely won’t be long before the share price stops moving sideways and has another leg higher.
The 45 analysts who cover Amazon forecast that the stock will gain at least 20% over the next year and rise to $4,105. The lowest estimate on the stock is currently $3,775, which would be 10% above where the shares are currently sitting. Should something unexpected happen and we all be forced online again, Amazon stock could move even higher.
On the date of publication, Joel Baglole 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.