Investing

Top Strategist Says Get Defensive for the Next 6 Months: 4 Safe Stocks to Buy

Any way you slice it, the market is way overbought and very expensive. While there is a huge tailwind from the continued stimulus, low interest rates and money markets stuffed with cash, there is an old Wall Street adage that should probably be considered now: Sell in May and go away. While pithy, and probably something that the Robinhood and WallStreetBets crowd have never heard, it may make sense for investors to heed now as we approach May.


A new research report from Michael Hartnett, the outstanding investment strategist at BofA Securities, makes the case that the toxic combination of inflation, quantitative easing tapering and higher taxes could give a big jolt to the stock market. So the BofA Investment Clock, as it is referred to, suggests a rotation of capital away from momentum plays, bonds and technology to the defensive sectors like consumer staples and utilities The firm seed the move as a market hedge for the rest of the second quarter, and a macro hedge over the next six months.

We screened the BofA Securities equity research universe looking for consumer staples and utility stocks that are rated Buy and have the best volatility risk rating at the firm. We found four great ideas for investors looking to lighten up on portfolio risk. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Coca-Cola

This remains a top Warren Buffet holding and offers not only safety but also an incredibly strong worldwide brand with 40% overseas sales. Coca-Cola Co. (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands.

Led by Coca-Cola, one of the world’s most valuable brands, the company’s portfolio features 20 billion-dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del Valle. Globally, it is the number one provider of sparkling beverages, ready-to-drink coffees and juices and juice drinks.

Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy Coca-Cola beverages at a rate of more than 1.9 billion servings a day. Also remember that the company also owns 16.7% of Monster Beverage, which continues to deliver big numbers.

The analysts said this after the solid first-quarter report:

First quarter 2021 adjusted earnings-per-share of $0.55 versus BofA/Visible Alpha consensus of $0.50 with upside from higher sales and below the line items. Overall the quarter increases optimism related to the company’s sales and earnings getting back to pre-Covid levels. We slightly raise our fiscal year 21-23 earnings-per-share, reiterate our Buy rating and raise our price target.

Investors receive a dependable 3.08% dividend. The $56 BofA Securities price target for the stock was raised to $60. The Wall Street consensus target is $59.36. Coca-Cola stock closed on Friday at $54.47 a share.

Dominion Energy

Many of the Wall Street firms that we cover are still very positive on utilities, and this company is highly rated. Dominion Energy Inc. (NYSE: D) is an American power and energy company that operates through the following four segments:

  • The Dominion Energy Virginia segment generates, transmits and distributes regulated electricity to residential, commercial, industrial and governmental customers in Virginia and North Carolina.
  • The Gas Distribution segment engages in the regulated natural gas gathering, transportation, distribution and sales activities, as well as distributes nonregulated renewable natural gas. This segment serves residential, commercial and industrial customers.
  • The Dominion Energy South Carolina segment generates, transmits and distributes electricity and natural gas to residential, commercial and industrial customers in South Carolina.
  • And the Contracted Assets segment is involved in the energy marketing and price risk activities.