Jefferies Names 10 "Low-Stress" Stocks for the Summer to Weather AI Volatility

Analysts at Jefferies have recommended that investors buy high-quality, “low-stress” stocks to weather the summer calmly amid rising market volatility driven by AI-related concerns, according to CNBC. Among the stocks Jefferies highlights are those in the healthcare and retail sectors, as well as McDonald’s, Netflix, and PepsiCo.

The S&P 500 Momentum Index—an index that selects the S&P 500 stocks with the strongest positive “momentum,” that is, those that have recently shown the strongest price growth— — has outperformed the broad U.S. stock index by more than 70% since 2024, according to a client note from Jefferies’ quantitative strategy team, led by Deshem Peramunetillake. The experts noted that this gap has approached levels seen during the dot-com boom of the 1990s. Moreover, while before the start of the war in the Middle East, “momentum” stocks could still include shares from the commodities and defense sectors, now the entire market is being “driven” exclusively by AI, according to Jefferies, which warns that this situation “increases the risk of a sharp reversal if market sentiment deteriorates.” “Although in the long term we still believe that the [AI] sector will come out on top, the factors mentioned above could lead to a loss of momentum and a reversal of the AI-driven trend,” Peramunetilleke said.

In light of this, analysts at Jefferies have compiled a list of reliable, low-volatility companies that can protect a portfolio in the event of a storm in the technology sector. Among them are companies with a market capitalization of more than $10 billion and strong fundamentals. Additional selection criteria included a long-term free cash flow yield above 3% and an attractive valuation—a forward P/E ratio (price/expected earnings for the following year) must be less than 20. As a result, 10 stocks made the list.

— AbbVie is a biopharmaceutical company. The consensus rating from Wall Street analysts remains “Overweight.” Of the 32 analysts, the overwhelming majority—24—are positive and recommend buying the stock. Another seven hold a neutral (“Hold”) stance, and only one is bearish. In premarket trading on July 8, the stock rose 0.9%; year-to-date, it is up more than 11%.

— American Express is a financial services company. Wall Street analysts’ opinions on its outlook are mixed, despite the fact that the company’s overall stock rating is “Overweight” (Overweight)—most experts (16) recommend holding the company’s shares, 15 recommend “buying,” and one recommends selling. In premarket trading on July 8, the stock was down 0.5%; since the beginning of the year, it has fallen 5%.

— Home Depot is a retail chain specializing in home improvement and home goods. The current consensus analyst rating for the stock is “Overweight.” In total, 22 out of 39 experts recommend buying the stock, although their optimism has cooled slightly over the past month: the number of unequivocally positive ratings has dropped from 20 to 19. At the same time, the group of analysts with a neutral view (“Hold”) has grown to 16, while only one analyst has a negative outlook. In premarket trading on July 8, the stock price fell by 1.9%; year-to-date, it is up slightly by 0.3%.

— Lowe’s Companies — a retail chain specializing in home improvement and landscaping products. The Wall Street consensus rating for the stock is “Overweight.” Of the 37 experts, 26 are positive (Buy/Overweight), and optimism is growing noticeably: three months ago, there were 22 such analysts. Meanwhile, the number of neutral “Hold” ratings is declining—from 13 to 10—and only one analyst has a negative outlook (Sell rating). During trading on July 8, the stock fell by 1.3%; since the beginning of the year, it has dropped by more than 8%.

— McDonald’s is the world’s largest fast-food chain. Of 36 analysts, 21 are positive on the stock (Buy/Overweight ratings), 14 have a neutral “Hold” stance, and only one recommends selling. In premarket trading on July 8, the company’s stock rose slightly—by 0.15%—though it is down more than 7% year-to-date.

— Netflix is a streaming service for movies and TV shows. Forty out of 55 analysts are positive about the stock’s outlook (Buy/Overweight), while another 15 maintain a neutral “Hold” rating; there are no sell recommendations (Underweight/Sell). In premarket trading on July 8, the stock is up slightly; year-to-date, it is down more than 18%.

— PepsiCo is a manufacturer of food products, carbonated beverages, and soft drinks. The Wall Street consensus rating for the company’s stock is “Overweight.” However, experts are generally cautious about PepsiCo shares—most of the 14 recommend holding them in a portfolio, 10 recommend buying (Buy/Overweight ratings), and one recommends selling (Sell). The stock was up 0.7% in premarket trading on July 8 and has risen 1% year-to-date.

— Procter & Gamble is a consumer goods manufacturer. The consensus on these shares remains at “Overweight,” but optimism is gradually waning. There are currently 13 positive ratings (Buy/Overweight) out of 27, down from 15 a quarter ago, while the number of neutral “Hold” recommendations has risen from 12 to 13 during that time. Only one analyst is bearish (Underweight rating). On July 7, the stock closed up 2.3%; in premarket trading on July 8, there was virtually no change. Year-to-date, the stock is up 6%.

— S&P Global is a financial analytics firm. Twenty-seven out of 29 analysts have issued positive ratings on these stocks (Buy/Overweight), and that number has actually increased over the quarter—there are now 23 “Buy” recommendations, up from 22. Only two analysts hold a neutral position, and there are no negative ratings (Underweight/Sell). Since the beginning of the year, the stock has fallen by 10%.

— Stryker is a manufacturer of medical equipment, instruments, and implants. Analysts’ consensus rating for the stock remains “Overweight.” Of the 29 analysts, the overwhelming majority (22) recommend buying the stock; the remaining seven hold a neutral (“hold”) position, and there are no sell recommendations. Since the beginning of the year, the company’s stock has fallen 6%.

This article was AI-translated and verified by a human editor