Susan Dziubinski: I’m Susan Dziubinski with Morningstar. Low-volatility stocks have proven their worth in 2025: The Morningstar US Low Volatility Factor Index has outperformed the broad market this year.
So, what are low-volatility stocks? Low-volatility stocks have historically offered more price stability when compared with other stocks. And while there’s no such thing as a safe stock, low-volatility stocks tend to hold up better during market corrections, though they also often lag in bull markets.
Today, we’re talking about the three stocks that are the largest holdings in Morningstar’s low-volatility index. Investors who’d like to add some stability to their portfolios should keep these three stocks on their watchlists and consider buying when they’re trading near or below Morningstar’s fair value estimates.
3 Stable Stocks to Buy When the Price is Right
Microsoft MSFTBerkshire Hathaway BRK.A BRK.BJohnson and Johnson JNJ
Microsoft MSFT is the largest stock by weight in Morningstar’s low-volatility index. Now, technology stocks as a group have been hit hard this year, but Microsoft has weathered the storm better than many of its peers and is outperforming relative to the Morningstar US Technology Index. Microsoft is among Morningstar’s top picks in technology today. We think the company has less exposure to tariff risks than others in its sector. We also think the company has carved out a wide economic moat, and best of all, the stock looks undervalued relative to our fair value estimate.
Read Morningstar’s full report on Microsoft.
Berkshire Hathaway BRK.A BRK.B is the second-largest stock in the index. Berkshire Hathaway’s stock has significantly outperformed the market this year. The company’s massive cash stake and diversified portfolio have made it a safe haven that investors have flocked to in 2025. We assign Berkshire a narrow economic moat rating. We think that the huge and growing amounts of capital Berkshire must deal with will ultimately limit its ability to generate the outsize returns on invested capital that it once did. Berkshire Hathaway’s stock looks a little overvalued today relative to Morningstar’s fair value estimate.
Read Morningstar’s full report on Berkshire Hathaway.
Johnson and Johnson JNJ is the final stable stock we’ll talk about today. We think J&J has carved out a wide economic moat with its diverse revenue base, research pipeline, and exceptional cash flow generation. We recently reiterated our fair value estimate on the stock after earnings and incorporated management’s guidance after assessing the expected impact of tariffs. And while President Trump has been clear he’d like to lower drug costs, we nevertheless think innovation and a promising mergers-and-acquisitions environment support long-term pricing power among drugmakers. J&J’s stock has performed well this year and looks about fairly valued today.
Read Morningstar’s full report on Johnson & Johnson.
For more stock ideas, be sure to visit morningstar.com.
Morningstar directors Karen Andersen and Eric Compton, strategist Gregg Warren, and senior analyst Dan Romanoff provided the research behind this segment.
Watch 4 Stocks to Buy Before They Rally Further for more from Susan Dziubinksi.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
