Low-Risk Stocks Beat Market Returns, but Not Always Immediately

The Motley Fool's David Gardner picked five low-risk stocks for the next year in September 2016, when market conditions were bearish. The common denominator among these picks was their ranking as low-risk companies in Gardner's universe. Ten years later, Gardner and analyst Rick Munarriz reviewed how Apple, Canadian National Railway, Disney, Ecolab, and Alphabet performed one year after selection and 10 years later.

According to the review, only two of the five stocks beat the market in the year they were picked: Canadian National Railway and Walt Disney. Over the next decade, however, all five stocks outperformed the S&P 500 ETF (SPY), with Apple increasing by over 600% and Alphabet by over 700%. The Motley Fool's 25-point risk rating system was used to identify these low-risk companies.

Gardner noted that the stock market had more than tripled since 2016, making the performance of the five stocks even more impressive. He also highlighted that expectations for Apple at the time were subdued due to underperformance and negative chatter around product launches.