3 Safe Haven Stocks to Own in an Unpredictable Market

The stock market had a great start to 2024, with the S&P 500 Index ($SPX) ending the first quarter with 10.2% gains - its most impressive Q1 performance in five years. However, the SPX is down more than 4% to start April. A stronger-than-expected jobs report paired with stickier inflation in March triggered a sell-off, leaving many wondering when the Federal Reserve might start scaling back interest rates.

In fact, the Fed's March meeting minutes revealed they're waiting for more signs of inflation easing before considering rate cuts, and both Fed Chair Powell and Vice Chair Philip Jefferson have since downplayed prior forecasts for three cuts this year. Given the “higher for longer” rate scenario, the 10-year Treasury yield (TOJ24) surged to 4.61%, its highest since November 2023.

Additionally, investors are fretting over other big-picture issues - like flaring geopolitical tensions in the Middle East, along with the persistent conflict between Russia and Ukraine. As a result, investors are turning to safe havens like gold(GCM24), banking on its track record of stability during financial turmoil.

Amid the current economic uncertainty, here are three reliable stocks spanning various sectors that could weather any storm.

Safe Haven Stock #1: PepsiCo

When we’re talking about defensive stocks, consumer staples might come to mind first, due to their steady demand regardless of market conditions, strong dividend income, and the stability and longevity of these companies. To that end, New York-based PepsiCo, Inc. (PEP), valued at $230.2 billion by market cap, is first on the list.

PepsiCo, founded in 1893, manufactures and distributes carbonated soft drinks, juices, bottled water, sports drinks, energy drinks, coffee, tea, snacks, chips, dips, and crackers, with top brands like Pepsi, Mountain Dew, Gatorade, Tropicana, Quaker Oats, Fritos, Lay's, Doritos, and Ruffles in its portfolio.

Shares of PEP have not performed as well as the broader S&P over  the past 52 weeks, dropping by 8.3% over this time frame.

PepsiCo usually allocates around three-quarters of its earnings to dividends. With a record of consistent dividend increases for over 50 years, it holds the esteemed "Dividend King" title. PEP offers an annualized dividend of $5.06, which translates to a 3.02% dividend yield - more than double the S&P 500's 1.28%.

PEP stock currently trades at 20.62 times forward earnings and 2.53 times sales – both lower than its own five-year averages of 24.50x and 2.82x, respectively. Pepsi stock’s price/sales multiple is also a discount to its closest peer, Coca-Cola Company (KO), at 5.48x.

PepsiCo reported a Q4 2023 profit of $2.5 billion, or $1.78 per share, on Feb. 9, on revenue of $27.9 billion - which fell slightly short of consensus estimates, as did its forecast for 4% organic revenue growth. 

Its free cash flow for fiscal 2023 rose 39% year over year to $8.1 billion, and the company returned $6.7 billion as dividends to shareholders and $1 billion through share repurchases. For fiscal 2024, PepsiCo expects total cash returns to shareholders of approximately $8.2 billion, comprising $7.2 billion in dividends and $1 billion in share repurchases. 

Analysts tracking PepsiCo expect its EPS to grow 7% annually in fiscal 2024 and 8% in fiscal 2025. The beverage company is expected to announce Q1 earnings results on April 23 before the market opens.

Pepsi stock has a consensus “Moderate Buy” rating. Of the 17 analysts offering recommendations for the stock, ten rate it a “Strong Buy,” and seven suggest a “Hold."

The average analyst price target for PepsiCo is $190.93, which indicates a potential upside of 12.9% from current levels.

Safe Haven Stock #2: Boston Scientific Corporation

Massachusetts-headquartered Boston Scientific Corporation (BSX), with a market cap of $99.9 billion, is next on our list of safe haven stocks. It provides a wide range of medical devices for gastrointestinal, pulmonary, urological, and neurological conditions, as well as cardiovascular diseases and cancer treatments.

Boston Scientific stock has surged 17.1% on a YTD basis, outperforming the SPX’s 5.8% gain over the same time frame.

The stock currently trades at 30.25 times forward earnings and 7.01 times sales – both higher than its own five-year average multiples.

The medical device manufacturer reported Q4 earnings of $0.55 per share on Jan. 31, which came in 7.8% above Wall Street’s estimate Sales of $3.7 billion, were up 14.9% year over year, and also surpassed consensus forecasts. 

Boston Scientific is scheduled to report Q1 results on April 24, before the opening bell. Ahead of the report, the company projected revenue growth between 7.5% and 9.5%, with adjusted EPS expected to range between $0.50 and $0.52.

Analysts tracking Boston Scientific expect its EPS to grow 9.8% year over year to $2.25 in fiscal 2024 and rise further 12.9% to $2.54 in fiscal 2025.

Boston Scientific has a consensus “Strong Buy” rating. Out of the 24 analysts covering the stock, nineteen recommend “Strong Buy,” three advise “Moderate Buy,” and two say “Hold.”

The average analyst price target for Boston Scientific is $70.87, indicating a modest 4.5% upside potential. However, the Street-high price target for BSX is $80, suggesting that the stock could rally as much as 18% from current levels.

Safe Haven Stock #3: Elevance Health

Elevance Health, Inc. (ELV), headquartered in Indianapolis, is a health benefits company in the U.S., offering various health plans, services, and insurance products through four segments: Health Benefits; CarelonRx; Carelon Services; and Corporate & Other.

Valued at $118 billion by market cap, shares of Elevance Health have gained nearly 8% YTD to outperform the broader S&P.

The company has a record of increasing its dividends for 12 consecutive years. The annualized dividend of $6.07 translates to a 1.20% dividend yield. The low payout ratio of 17.7% indicates ample room for Elevance to continue increasing its dividend in the coming years.

The stock currently trades at 13.43 times forward earnings and 0.68 times sales – both of which are lower than the industry median and its own five-year average.

The health benefits company reported Q4 adjusted EPS of $5.62 on Jan. 24, which narrowly beat Wall Street estimates. The bottom-line beat was primarily due to improved premiums in the Commercial Health Benefits business and better performance in the Carelon Services business. Plus, revenue of $42.4 billion also marginally surpassed analyst projections. During Q4, the company paid a quarterly dividend of $1.48 per share, representing a cash distribution of $346 million.

The company anticipates operating revenue growing in the flat to low-single digits this fiscal year, while adjusted EPS is projected to be over $37.10. Analysts tracking Elevance Health expect its EPS to grow 11.7% year over year to $37.03 in fiscal 2024 and rise further to $41.45 in fiscal 2025.

Investors should note that Elevance Health is expected to release its Q1 earnings this Thursday, April 18, before the market opens - so for those looking to steer clear of additional volatility, be sure not to pick up shares directly ahead of that binary event.

Elevance Health has a consensus “Strong Buy” rating. Out of the 18 analysts covering the stock, sixteen recommend “Strong Buy,” one advises “Moderate Buy,” and one gives a “Hold” rating.

The average analyst price target for Elevance Health is $574.71, indicating a 12.5% upside potential from current levels.