The head of KKM advised "boring" securities to combat volatility. Who are the favorites?

Investors in the second quarter may need protection from the volatility that "boring" blue chip stocks can provide, Jeff Kilburg, head of investment banking at KKM Financial, told CNBC. He advised several securities that "don't get any love on the TV airwaves" but are "top-notch industry names" that market participants are starting to lean toward again. Visa, for example, appeared to be among them.

"Boring" stocks may be a safer bet in the second half of the year, says Jeff Kilburg, founder of investment firm KKM Financial. This is written by CNBC. 

Kilburg noted that markets faced increased volatility at the end of the first quarter and the beginning of the second quarter due to fear and uncertainty surrounding President Donald Trump's trade war. The market plunged to its lowest level of the year in April, but has since recovered the losses, with the S&P 500 Index up 25% since then. However, uncertainty hasn't gone anywhere and probably won't abate until the end of 2025, Kilburg warned. He believes the market is entering a "new volatility mode" and could remain sensitive to any fluctuations in geopolitical tensions. 

"I think it's more important than ever for investors to keep a close eye on their investments," the investor told CNBC.

In his opinion, investors should now restructure their portfolios towards more protective blue chips, which investors actively sold off in April;

"The chain reaction effect after those really tumultuous few weeks [after Trump announced the duties] is that people again want to own shares in companies they know well. They want to hold clear and tangible businesses in their portfolio - and those are exactly the 'boring' names," Kilburg said.

- Kilburg sees Visa as a company to invest in to protect against volatility. Its stock is up 13% since the beginning of the year. In June, Mizuho upgraded its credit card issuer rating from neutral to Outperform ("above market"). 

"We see more reason for optimism as the transition from cash to cards in the U.S. will take longer than previously thought (we estimate real bank card penetration in the U.S. to be around 75% versus the consensus forecast of 80-90%). This leaves room for another decade of strong domestic revenue growth," Mizuho analyst Dan Dolev wrote.

Mizuho raised its target price on Visa stock from $359 to $425 per share. The new forecast assumes growth of about 42% from the closing price on Wednesday, July 2.

- Among the investment ideas in the industrial stocks segment, Kilburg cited the securities of energy company Duke Energy, which have added more than 9% in value since the beginning of the year - and that's on top of a 3.5% dividend yield, CNBC noted.

Last week, Goldman Sachs upgraded Duke's stock and advised buying it.

"We are raising our rating on Duke Energy from Neutral to Buy, as we believe the stock has underperformed other more defensive securities since the beginning of the year, with the company making regulatory progress in building significant generating capacity that is not currently factored into the current price," analyst Carly Davenport wrote.

Goldman set a $132 target price on Duke Energy shares, up 13% from Wednesday's close.

- Another company Kilburg looked at was Waste Management. Its stock is up more than 12% in 2025. Last month, Melius Research analyst Rob Wertheimer began coverage of these securities with a buy recommendation, emphasizing their "steady growth in a chaotic world."

Other securities that Kilburg looked at included retailer Costco, mobile operator Verizon, the largest U.S. bank JPMorgan, and companies Masco, CVS, Comcast, Nutrien and Sysco.

Investors have rushed into the riskiest segments of the U.S. market in the current U.S. market rally, raising concerns about the sustainability of this record recovery, noted Bloomberg. 

"The rally in the second quarter was driven by the rise in so-called lower quality baskets - Dash to Trash. This indicates that retail investors continue to buy aggressively on drawdowns and the painful positional trade has shifted to a race for yield," said sales trader at Panmure Liberum Limited Mark Taylor. 

For example, in the second quarter, shares of bitcoin-related companies rose 78%, securities of companies in the field of quantum computing added 69%, and so-called meme stocks rose 44%. These are all volatile segments of the market where investors are betting on future profits that may never materialize. A basket of stocks with high levels of short positions rose 29%, Bloomberg notes. By comparison, the S&P 500 rose just 10.6% over the same period.

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