For more than a century, the stock market has been the premier wealth creator for investors. But this doesn't mean stocks move higher in a straight line.
Over the last seven trading sessions, investors have witnessed historic levels of volatility in the iconic Dow Jones Industrial Average (^DJI 0.15%), benchmark S&P 500 (^GSPC +0.80%), and growth-focused Nasdaq Composite (^IXIC +1.59%).
For example, the 90-day pause on higher reciprocal tariffs for most countries, which was announced by President Donald Trump on April 9, led the Dow, S&P 500, and Nasdaq to their largest single-session point increases in their respective histories. Meanwhile, the Nasdaq endured three of its five biggest single-day point declines from April 3 to April 10, with the S&P 500 navigating three of its six-largest single-session point drops during this same span.
Volatility is the price of admission investors pay for access to this proven wealth creator. Thankfully, stock market corrections, bear markets, and crashes tend to be short-lived. Putting your money to work during periods of historic volatility is usually a smart move.
Image source: Getty Images.
But well before the stock market's bout of historic volatility, some of Wall Street's brightest money managers were purchasing safe stocks that can thrive in virtually any environment. What follows are five of the safest stocks billionaire investors have bought for their respective funds.
Philip Morris International
Lone Pine Capital's billionaire chief Stephen Mandel purchased four new stocks for his fund's portfolio during the December-ended quarter, as well as added to five existing positions. Arguably, none of these additions stands out more than the 1,987,716 shares purchased of tobacco giant Philip Morris International (PM 1.43%).
Tobacco stocks may not be 100% impervious to stock market volatility and short-term fear, but they're pretty close to it. Cigarette smokers have demonstrated a willingness to absorb substantial price hikes over time, and the addictive nature of the nicotine found in tobacco keeps most users loyal to the product.
Philip Morris also has the advantage of operating globally. With a presence in more than 180 countries, it's able to move the organic growth needle in emerging markets where tobacco is still a luxury, as well as rake in generally predictable operating cash flow in developed countries.
Lastly, Philip Morris International is benefiting from its ongoing but increasingly successful transition to a smokeless future. The introduction of Zyn nicotine pouches and its Iqos heated tobacco system have reignited sales and profit growth for the company. While Philip Morris stock is unlikely to move significantly higher during the current market tumult, its downside is, presumably, limited.
NYSE: TEVA
Key Data Points
Teva Pharmaceutical Industries
Billionaire Stanley Druckenmiller of Duquesne Family Office closed out 2024 overseeing a 78-stock, $3.72 billion fund. Though turnover tends to be high in Druckenmiller's fund, he's been aggressively adding to an existing position in brand-name and generic-drug developer Teva Pharmaceutical Industries (TEVA 0.50%). Druckenmiller green-lit the purchase of 7,569,450 shares of Teva in the fourth quarter.
What's great about healthcare stocks is they're highly defensive. This is to say that people don't stop becoming ill or requiring prescription drugs just because Wall Street had a rough couple of weeks. With demand for brand-name and generic drugs constant and/or climbing, Teva's cash flow can be forecast well in advance.
Teva's recent return to sales growth is a function of the company shifting its strategy more toward novel-drug development. Whereas generic drugs offer low margins and pricing power can be weak at times, novel therapies sport juicy margins and strong pricing power. Tardive dyskinesia drug Austedo, which is Teva's top-selling brand-name therapy, may surpass $2 billion in sales this year after generating $1.23 billion in revenue in 2023.
Teva's turnaround has also featured a remarkable improvement in its financial flexibility. Following its August 2016 buyout of generic drugmaker Actavis, Teva's net debt clocked in around $35 billion. It ended last year at closer to $14.5 billion. With Teva's forward price-to-earnings (P/E) ratio now below 5, the risk-versus-reward profile strongly favors optimists.
Image source: Sirius XM.
Sirius XM Holdings
Despite Berkshire Hathaway's Warren Buffett being a persistent net seller of stocks for the last nine quarters, he's done a little bit of shopping recently. In particular, he's been scooping up shares of satellite-radio operator Sirius XM Holdings (SIRI +2.00%). Between Jan. 30 and Feb. 3, Berkshire's billionaire chief oversaw the purchase of 2,308,119 shares of Sirius XM.
One reason Sirius XM can be viewed as something of a safe stock amid historic market volatility is its legal monopoly status. It's the only licensed satellite-radio operator. Although it still fights for listeners with terrestrial and online radio companies, being the only licensed satellite-radio provider affords it a good degree of subscription pricing power.
Sirius XM's revenue diversification also helps it stand out from its peers. While most radio operators generate the bulk of their revenue from advertising, which is prone to significant weakness during periods of uncertainty for the U.S. economy and Wall Street, Sirius XM brought in just 20% of its net sales from ads last year. A majority of its revenue (76% of 2024 net sales) comes from self-pay subscriptions. These subscribers are less likely to cancel their service than businesses are to pare back their marketing budgets during periods of turbulence.
Sirius XM's valuation provides a solid floor, too. Valued at just 6.5 times forward-year earnings, there's reason to believe the company's downside is minimal at this point. A dividend yield north of 5% doesn't hurt, either.
NYSE: ELV
Key Data Points
Elevance Health
Billionaire Leon Cooperman closed out 2024 holding 45 securities valued at more than $2.6 billion. While there were more than a dozen stocks newly purchased and/or added to during the fourth quarter, the stand-out buy was the addition of 107,400 shares of health insurance juggernaut Elevance Health (ELV 0.69%).
Circling back to the discussion of Teva, demand for healthcare services tends to be highly predictable, regardless of what's happening with the U.S. economy or stock market. The advantage for health insurers is that it typically affords them relatively strong premium pricing power. In other words, they're often able to increase premiums to ensure they can cover rising treatment costs.
In addition to strong premium pricing power, Elevance has relied on acquisitions to expand the reach of its potentially higher-margin healthcare services subsidiary Carelon. This includes the buyouts of home health provider CareBridge, as well as BioPlus, which is a specialty pharmacy catered to patients with complex and chronic conditions. This healthcare services focus can increase margins and keep users within Elevance Health's ecosystem.
Shares of Elevance Health are currently valued at 11 times forecast earnings for 2026, which represents a 19% discount to its average forward earnings multiple over the last half-decade. This should provide ample downside protection amid heightened stock market volatility.
NYSE: AMT
Key Data Points
American Tower
The fifth billionaire money manager who was purchasing shares of an exceptionally safe stock in advance of Wall Street's historic volatility is Viking Global Investors' Ole Andreas Halvorsen. Among the 86 stocks Halvorsen holds stakes in, the brand-new acquisition of 897,340 shares of specialty real estate investment trust (REIT) American Tower (AMT +0.33%) is what stands out.
American Tower is best-known for its ownership of roughly 149,000 cellular communication towers in the U.S. and 21 other countries. Large telecom companies lease access to these towers for the antennas that make their 4G and 5G wireless networks tick. Approximately 45% of American Tower's fourth-quarter revenue came from America's big-three telecom companies, with another 28% in sales tracing back to international telecom tenants. More than half of these existing leases extend to 2030 or beyond, which leads to highly consistent funds from operations.
However, American Tower is also dipping its toes into the water to take advantage of the growing artificial intelligence (AI) and tech boom. As of the end of 2024, it was operating 29 data centers, many of which were in metropolitan U.S. cities. Though data center leasing represents only 10% of total sales at the moment, it's the company's fastest-growing segment.
The final puzzle piece that makes American Tower a safe stock to own is its dividend. In exchange for preferred tax treatment, REITs dole out most of their profits in the form of a dividend. American Tower stock is currently yielding in excess of 3%.
