In a market environment that's anything but calm, both individual investors and mutual fund managers are rethinking their strategies. Growth stocks are proving elusive, so many are turning to defensive names—a tactic long embraced by Warren Buffett.

Investor's Business Daily's "Stocks That Funds Are Buying" screener recently highlighted 14 stocks that fit the bill. Among these, Coca‑Cola KO and O'Reilly Automotive ORLY are getting a lot of attention.

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Defensive Moves Gain Ground

Coca‑Cola has managed to stand out even as major indexes have been slipping and market volatility has increased. According to Alpha Spread, over the past 12 months, Coca-Cola has outperformed the S&P 500, delivering a 19% return compared to the index’s 9% growth. This strong performance highlights Coca-Cola’s resilience and continued investor confidence.

The stock's weekly performance has placed it solidly in a buy zone, with critical entry levels around $71.77 and 72.65. Coca‑Cola's momentum has been strong since late January, and recent fourth‑quarter earnings estimates exceeded expectations, according to The Motley Fool.

Forecasts indicate earnings could grow by 3% to 4% in 2025. Notably, Simply Wall Street reports institutional investors hold approximately 65% of Coca-Cola’s shares, highlighting strong confidence from major investment firms. A steady dividend yield of 2.8% only adds to the stock's appeal.

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O'Reilly Automotive ORLY is also turning heads. As consumers increasingly choose to maintain and repair their current vehicles over buying new ones in uncertain times, demand for auto parts has remained steady. Its share price has been creeping above a flat‑base buy zone, even hitting levels of $1,348.16. 

Despite some fluctuations following a mixed fourth‑quarter report in February, the stock has accumulated over a 13% gain year‑to‑date, as reported by Macrotrends. 

The company's fundamentals—reflected in an earnings stability factor of 7, an accumulation/distribution rating of B–, and a 1.2 up/down volume ratio—indicate a solid position. Recent data from Investors Business Daily shows that its relative strength rating has risen into the 90s, reinforcing its defensive status.

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In the midst of this shift, big money managers scoop up shares, reinforcing a trend toward safer investments. Data from MarketWatch reveal that just 36% of actively managed U.S. large‑cap mutual funds outperformed their benchmarks in 2024. This underperformance has nudged managers to lean into stocks that promise steady returns.

Not everyone sees the picture the same way. Some market strategists believe that high‑quality growth stocks still carry long‑term potential if market sentiment shifts. According to Washington Crossing Advisors, high-quality companies generally fare better in a difficult economic environment because they possess good balance sheets and sound earnings.

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