My Top 5 Favorite Stocks for an Uncertain Market

The S&P 500 has climbed this year, adding to three consecutive years of gains. But with levels near record highs, valuations relatively high, and concerns about artificial intelligence (AI) spending and rising inflation brewing, some investors have become more cautious. That's why right now is an excellent time to add a few highly resilient stocks to your portfolio.

These players have what it takes to maintain a certain level of stability or even excel during any market environment. They are providers of essential medicines, sellers of items we need daily, or offer another feature that helps them keep business rolling in easy times and tough times. So, if today's headwinds weigh further on the market, such stocks will offer you security; but if troubles blow over, these stocks still make great long-term investments.

Let's check out my five favorite stocks to buy during uncertain market times.

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1. Johnson & Johnson

Johnson & Johnson (NYSE:JNJ) sells some of the most successful pharmaceutical and medtech products around -- in fact, it has 28 products and platforms that generate more than $1 billion in annual revenue. This puts the company on track to reach a major goal this year: $100 billion in sales.

This healthcare giant has been delivering growth in both its innovative medicine (pharma) and medtech businesses quarter after quarter, and it has demonstrated that it can grow significantly even after losing exclusivity on a star product -- that's immunology drug, Stelara. In the recent quarter, eight J&J innovative medicine brands delivered double-digit sales gains.

Meanwhile, J&J is a Dividend King, meaning it's increased its dividend payments for more than 50 consecutive years. So you can count on this company for passive income, no matter what the stock market is doing.

2. Vertex Pharmaceuticals

Vertex Pharmaceuticals (NASDAQ:VRTX) is the leader in the cystic fibrosis (CF) treatment market, with intellectual property ensuring its position until the late 2030s. These products helped the company deliver $12 billion in revenue last year.

On top of this, Vertex has taken impressive steps into other treatment areas, winning approval in recent years for a pain drug and a gene editing treatment for blood disorders. These two products, being rather new, have plenty of room for growth. And Vertex's pipeline, with a fresh focus on renal conditions, offers another potential catalyst for sales gains down the road. The company submitted povetacicept for adults with immunoglobulin A nephropathy to regulators for potential approval and awaits a decision by late November.

All of this makes now a fantastic time to get in on this innovative biotech player.

3. Costco

Costco (NASDAQ:COST) offers customers access to essentials like groceries and gas for dirt cheap prices, and this is something that's particularly attractive when times are tough. Though customers pay an annual fee to shop in Costco's warehouses, the savings may more than compensate. And the high membership renewal rate -- greater than 90% in the U.S. and Canada -- suggests customers see value in shopping here.

All of this means Costco is likely to see strength even during uncertain times. I also like the fact that the company makes most of its profit from membership fees, so it's generating revenue before shoppers even set foot in the door. This, along with the high renewal rates, also offers investors a certain level of visibility on sales to come.

You can count on Costco for dividends, and the company has even paid special dividends in the past -- the most recent was a $15 per share payment in 2024.

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4. Coca-Cola

Coca-Cola's (NYSE:KO) eponymous beverage may not be an absolutely necessary product, but the company offers a broad range of non-alcoholic drinks in essentials such as water, juices, and coffee. And the company's brand strength means that even its sparkling beverages can hold their own during challenging economic times.

The drinks giant also has shown itself to be adaptable over time, creating beverages tailored to the needs of specific markets. All of this has helped Coca-Cola to continually gain value share and grow earnings over time.

Coca-Cola is also a Dividend King, meaning it’s shown its commitment to rewarding investors, too. Its high level of free cash flow, at about $14 billion, suggests it has what it takes to keep this momentum going. So investors can count on Coca-Cola for earnings strength and passive income.

5. American Express

American Express (NYSE:AXP) is a payment card powerhouse, and you might think that this would be a point of weakness in tough times. But American Express' customers tend to be affluent, and this population is less sensitive to economic shifts. This has offered the company earnings stability even during downturns.

I also like the idea that American Express continues to win over younger populations, suggesting that the payment card company may see growth in the years to come. In the most recent quarter, for example, 65% of global new consumer accounts were from Millennials and Gen Z.

"We continued to attract a large number of new customers, particularly Millennials and Gen-Zs who represent greater lifetime value," the company said in its report.

And like some of the other stocks I've mentioned here, American Express offers investors dividend growth, making it a fantastic stock to buy for an uncertain market.

American Express is an advertising partner of Motley Fool Money. Adria Cimino has positions in American Express and Vertex Pharmaceuticals. The Motley Fool has positions in and recommends American Express, Costco Wholesale, and Vertex Pharmaceuticals. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.