Guard against market volatility in the second half with ‘boring' stocks, investor Jeff Kilburg says

CNBC

03-07-2025

Investors may find "boring" stocks a safer bet heading into the second half of the year, according to Jeff Kilburg, founder and CEO of KKM Financial. Markets were plagued by heightened volatility at the end of the first quarter and the start of the second, as fear and uncertainty stemming from President Donald Trump's trade war spread. Stocks reached their lows of the year in early April, shortly after Trump announced his universal tariff policies. While stocks have recovered their losses since then — with the S & P 500 closing Wednesday 25% above its April closing low — Kilburg warned that volatility may not ease up for the reminder of 2025. In fact, he believes that the market is entering a new volatility regime and may continue to be sensitive to any type of geopolitical tensions. Kilburg pointed to the market's knee-jerk reaction to the Israel-Iran conflict as proof. "I think investor attention and needing to monitor your investments has never been more needed," he told CNBC in a recent interview. With volatility lingering at elevated levels, Kilburg believes that now is the time for investors to reposition themselves into the more defensive, blue-chip stocks that were sold off in April. "Some of these names that get no love on CNBC air waves, those are blue-chip industrial names that we've seen people tilt back into," he said. "The ripple effect that has happened after that really tumultuous couple of weeks is that people really want to own names that they know. They want to own names that they can touch and feel, and those are kind of the boring names." These more "boring," blue-chip stalwarts could help hedge against any upcoming uncertainty, Kilburg added, and may be why investors are again favoring industrial stocks. "That's why people have gotten a little more defensive, because honestly, we don't know what President Trump is going to say next. We don't know what his policy or ambition is next," he said. "Investors being uncertain of what shoe could potentially drop next, that has kind of made portfolios tilt more industrial, more defensive." Kilburg's top stock picks One name Kilburg likes that belongs to this category is Duke Energy . The electric and power stock has rallied nearly 9% this year, not including its 3.5% yield. Last week, Goldman Sachs upgraded its rating on Duke. "We raise Duke Energy from Neutral to Buy as the stock has lagged more defensive peers YTD and is making regulatory progress towards building significant generation that is not captured at current levels in our view," wrote analyst Carly Davenport. The bank's new price target of $132, lifted from $125, represents upside of approximately 13% from Duke Energy's Wednesday close. Another name Kilburg highlighted was Waste Management , which has gained 11% in 2025. Last month, Melius Research analyst Rob Wertheimer initiated coverage of the stock with a buy rating, highlighting its "stable growth in a chaotic world." "Despite the market's growing appreciation for the quality of these industry leaders, we think there's more outperformance to come in both the short and long run, from lower risk, less downside to earnings, and higher growth," he wrote. "While relative multiples are roughly in line with historical levels, we think the premium deserved now is larger than in the past." Kilburg also mentioned Visa , up TK% this year. In June, Mizuho upgraded the credit card issuer to an outperform rating from neutral. "We see more reason for optimism as the remaining cash-to-card runway in the U.S. is longer than previously expected (we est. true U.S. card penetration at ~75% vs. 80-90% consensus). This leaves room for another decade of solid top-line growth domestically," wrote Mizuho analyst Dan Dolev. "Plus, V's performance in Canada & Nordics offers evidence of above-PCE growth, even when card penetration is > 90%." In the same note, Dolev lifted his price target to $425 per share from $359. This updated forecast represents a TK% upside from Visa's Wednesday closing price. Other names Kilburg highlighted include Costco , Verizon , JPMorgan , Masco , CVS , Comcast , Nutrien and Sysco .