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As I consider which stocks to buy in 2025, I am increasingly concerned about the uncertainty ahead. From fluctuating interest rates in Europe to threats of trade tariffs in the United States, markets look set for a tough year.
Sure, when the economy is strong, it can pay to consider riskier growth stocks. But as a risk-averse investor, the current environment has led me to consider the benefits of defensive stocks. With slow growth, these stocks may look less attractive, but they are usually more stable. I'm talking about consumer goods, healthcare and utility stocks, as they continue to be in demand even when the economy falters.
With this in mind, I think the following actions are worth considering. I already have them and plan to buy more as the year progresses.
Consumer goods
British American Tobacco (LSE:BATS) has seen volatility of just 1.09% over the past month. It is also a solid and reliable dividend giant and a top 10 constituent of the FTSE UK High Dividend, Low Volatility Index (as of December 2024).
Its yield seems high at 8%, but unlike others, this is not due to a drop in price. In fact, the stock is up 26% last year. What's more, its dividends have increased steadily for more than 20 years.
However, it is fair to say that tobacco is controversial and could face a questionable future. Although hard work is being done to transition to less harmful smoke-free products, there is no guarantee that this strategy will work. Increasingly strict regulations could derail their progress.
Based on future cash flow estimates, it is trading 54% below fair value and the average 12-month forecast points to a 9.7% price increase.
Utilities
National Network (LSE: NG.) is another solid dividend stock with low volatility. As the UK's leading gas and electricity supplier, it is well positioned to maintain stable revenues.
The stock has weathered previous market declines relatively well. Over the past two decades, it has increased 158%, an annualized growth of 4.85% per year. It also has a yield of 5.4% and experienced just 1.33% volatility over the past month.
However, it faces challenges. Balancing the need to supply low-cost energy while meeting carbon reduction targets has proven difficult, driving it into debt. You need to find a way to balance these requirements without risking losses.
Profits are expected to fall to 71 pence per share in next full year results. Despite this, the average 12-month target price foresees an increase of 23.4%.
health care
AstraZeneca (LSE: AZN) is one of the UK's most established healthcare companies.
It is a little more volatile than others, up 1.48% in the last month. During Covid, it experienced unusually high growth and has since gone through several corrective periods. If you face risks from an ongoing government investigation in China and setbacks in clinical trials that could threaten your profits.
Historically, long-term price growth has been good, rising at an annual rate of 7.4% since 2005. It is also a reliable dividend payer, although the yield is currently low, at just 2%.
Analysts expect earnings to rise to £6.59 per share in next full year results, up from £5.70 in 2003. The average 12-month forecast predicts a price rise of 28%, with the analyst The most pessimistic expects only a loss of 0.42%. .
