3 Stock Picks for Conservative Investors

These 3 High-Quality Stocks Are Ideal for Conservative Investors 

When it comes to investing, putting capital at risk is simply unavoidable. That’s why it's so important to consider your own personal levels of risk tolerance before making any moves in the stock market. While high-flying growth and momentum stocks can certainly seem appealing on the surface due to their upside, the truth is that these types of investments are not suited for all market participants. Sometimes, focusing on less volatile stocks that can provide steady returns over the long run is much more attractive, especially if you are an investor that gets squeamish during market pullbacks.

This is part of what makes the stock market so unique, as there is something for everyone thanks to so many different options to explore for investing opportunities. If you are a conservative investor looking for some strong stock picks to pursue at this time, keep reading on below for 3 intriguing prospects.

Home Depot (NYSE: HD)

Focusing on blue-chip companies with stock prices that are steadily trending higher is a good approach for conservative investors, and Home Depot definitely fits the bill. As the world’s largest home improvement retailer, this company has been extremely profitable throughout the pandemic given the strength in the housing market and how people are investing more in do-it-yourself projects. The company offers a variety of building materials, home improvement products, lawn and garden products, décor products, and facilities maintenance products along with home improvement installation services and tool and equipment rental. Home Depot's trusted brand name attracts both DIY customers and professional customers, which has been driving long-term earnings growth and helped the company beat EPS estimates in each of the last 5 quarters.

What’s also great about this stock is how Home Depot’s management is fully committed to returning capital to shareholders. The company has returned roughly $56 billion to its shareholders with dividends and share buybacks over the last five years, which is certainly the type of consistency that conservative investors are looking for. It’s also worth noting that while supply chain issues are a risk for many retailers, Home Depot has taken matters into its own hands by chartering its own ships to help keep its stores stocked. Although the stock has rallied considerably in 2021 and is up about 40% year-to-date, it's a great buy-the-dip candidate for conservative investors looking to capitalize on the company's long-term growth. 

Coca-Cola Co (NYSE: KO)

Coca-Cola is probably a company that most people are already familiar with, as it’s the world’s largest producer of soft drinks and juice-related products. It’s a fantastic option for conservative investors for several reasons. The fact that the stock has a beta value of 0.66 means that it is theoretically less volatile than the market. That tells us Coca-Cola stock will typically move slower than the market averages, which is certainly appealing during periods of market downturns like we witnessed in September. This stock is also a great option given that it’s a consumer staples company that is perceived as non-cyclical, which means its products will generate steady sales regardless of what is happening in the economy.

While Coca-Cola has been dealing with some disruptions that resulted from the pandemic, the company’s business has been rebounding nicely as people head out to restaurants, stadiums, and other public settings to enjoy the company’s products again. Q3 unit case volumes surpassed 2019 levels for the first time since the onset of the pandemic, and the company reported Q3 EPS growth of 41% to $0.57 on net revenue growth of 16% year-over-year. It’s also worth mentioning that the stock offers a 3% dividend yield and is a dividend aristocrat, which is certainly attractive for conservative investors that want stable income.

Alphabet (NASDAQ: GOOGL)

Just because you are a conservative investor doesn’t mean that you can’t add exposure to high-growth technology stocks. Alphabet stands out as a strong option thanks to its rock-solid business model and incredibly consistent earnings performance. The world’s largest internet search provider and the largest generator of internet advertising revenue has beaten the consensus EPS estimates in each of the last 6 quarters, which is very impressive given how high the expectations are for the company. Most recently, Alphabet reported Q3 EPS growth of 71% on 41% revenue growth, which is astounding when you consider how large the company is. 

Adding shares of Alphabet essentially means owning the strongest player in digital advertising, which is an industry that seems unstoppable as technology becomes increasingly intertwined in our daily lives. Advertising spending has been picking up in a big way after the pandemic, evident in the fact that Alphabet reported Q3 advertising revenue of $53.1 billion, up 43% year-over-year. There’s also a lot for investors to like about the company’s Google Cloud business, which could be a strong growth driver over the long term with so many companies migrating to the cloud. While there are some regulatory risks for conservative investors to be aware of with Alphabet, it’s hard to find many other negatives for this technology giant.