S&P 500   4,455.48
DOW   34,798.00
QQQ   373.33
S&P 500   4,455.48
DOW   34,798.00
QQQ   373.33
S&P 500   4,455.48
DOW   34,798.00
QQQ   373.33
S&P 500   4,455.48
DOW   34,798.00
QQQ   373.33

7 Defensive Stocks to Buy on Market Jitters

Posted on Friday, July 23rd, 2021 by 7-defensive-stocks-to-buy-on-market-jitters
7 Defensive Stocks to Buy on Market JittersDefensive stocks are companies that deliver consistent revenue and earnings regardless of what is happening in the broader economy. This has the effect of allowing these stocks to outperform the market when the economy is in a downturn. But it also means that these stocks are frequently overlooked during bull markets.

After all, for many investors, particularly younger investors, but the benefit of capturing a dividend is far down on their list of priorities. But it’s specifically their ability to serve as a hedge against volatility that makes defensive stocks worthy of consideration in every portfolio.

One characteristic of defensive stocks is they have a high percentage of institutional ownership. These institutions (hedge funds, large investment banks, mutual funds, etc.) are frequently referred to as the “smart money.” By putting their money into these companies it’s a sign that the company is financially sound and likely to perform well.

Defensive stocks can be found in many sectors. In this presentation, we’re giving you one pick from various sectors.

#1 - Verizon (NYSE:VZ)

Verizon Communications logo

If I was putting this list together a year ago, I would have put AT&T (NYSE: T) ahead of Verizon (NYSE: VZ) on this list. Why?  Because I was buying into the “sum of its parts” argument that went with T stock. However, with AT&T’s recent decision to spin-off its WarnerMedia division, and the corresponding dividend cut when that deal is complete, I’ll slide Verizon here as a pure-play telecommunications stock.

5G will continue to be the catalyst for Verizon and the company has spent big recently. However, with approximately $150 billion in debt, the company is in a strong financial position. And Verizon’s dividend is already comparable to AT&T. So when AT&T cuts its dividend, Verizon will be a better value.

But the stock has more going for it than just its dividend. Analysts are forecasting that the stock has an upside of around 11%. That would be welcome news for investors who have held onto the stock for five years despite little to no growth to show for it.

About Verizon Communications
Verizon Communications, Inc is a holding company, which engages in the provision of communications, information, and entertainment products and services to consumers, businesses, and governmental agencies. It operates through the Verizon Consumer Group (Consumer) and Verizon Business Group (Business) segments.Read More 

Current Price: $54.37
Consensus Rating: Hold
Ratings Breakdown: 4 Buy Ratings, 8 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $60.75 (11.7% Upside)


#2 - Chewy (NYSE:CHWY)

Chewy logo

Chewy (NYSE: CHWY) may seem like an odd addition to a list of defensive stocks. However, that’s only because CHWY stock has only been publicly traded for a couple of years. The pandemic accelerated the company’s growth as its e-commerce model became an essential way for pet owners to buy food, toys, treats, and medication for their pets.

That has caused the stock to behave like a growth stock. In the last 12 months, CHWY stock is up more than 75%. However, in 2021, the stock is down 6%. But this is not because the company’s growth is slowing. In fact, the company has turned a profit in the last two quarters and it has grown revenue on a quarterly basis every quarter since going public.

I’m not claiming it will pay a dividend anytime soon. But the company’s core business is the definition of a defensive business model. Pet owners will continue to ensure their pets are cared for regardless of economic conditions. And Chewy facilitates that behavior.

About Chewy
Chewy, Inc engages in the provision of pure-play e-commerce business. It supplies pet medications, food, treats and other pet-health products and services for dogs, cats, fish, birds, small pets, horses, and reptiles. The company was founded by Ryan Cohen and Michael Day in September 2011 and is headquartered in Dania Beach, FL.

Current Price: $69.83
Consensus Rating: Buy
Ratings Breakdown: 12 Buy Ratings, 6 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $97.95 (40.3% Upside)


#3 - UnitedHealth Group (NYSE:UNH)

UnitedHealth Group logo

If pet wellness isn’t your thing, maybe you’ll be interested in human wellness. Health care stocks are generally good defensive stocks. With that in mind, my choice for this sector is UnitedHealth Group (NYSE: UNH)

It’s no secret that health insurance stocks dropped during the pandemic. For example, non-essential surgeries were postponed. That recovery is coming back strongly. And temporarily, the higher costs are eating into UnitedHealth’s profits.

If you’re part of the “what have you done for me lately?” crowd, UnitedHealth just reported a double beat when they reported earnings in July. And it also recently entered into a partnership with Peloton (NASDAQ: PTON) in which Peloton will provide free year-long access to Peloton classes for all eligible members.

UNH stock is up about 18% in 2021 which is slightly outpacing the S&P 500 Index. And a dividend of 1.4% is not that impressive, but it currently outpaces a 10-year Treasury note.

About UnitedHealth Group
UnitedHealth Group, Inc engages in the provision of health care coverage, software, and data consultancy services. It operates through the following segments: UnitedHealthcare, OptumHealth, OptumInsight, and OptumRx. The UnitedHealthcare segment utilizes Optum's capabilities to help coordinate patient care, improve affordability of medical care, analyze cost trends, manage pharmacy benefits, work with care providers more effectively, and create a simpler consumer experience.Read More 

Current Price: $407.08
Consensus Rating: Buy
Ratings Breakdown: 21 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $444.04 (9.1% Upside)


#4 - General Mills (NYSE:GIS)

General Mills logo

It’s not surprising that consumer staples companies make for strong defensive stocks. And General Mills (NYSE: GIS) is one of the best-in-class among these companies. The company is perhaps best known for its cereal brands including Cheerios.

But the company has expanded into many other convenience foods including its recent purchase of Blue Buffalo Pet Products. The $8 billion acquisition gives the company a foothold in one of the strongest growth drivers for the next decade.

Despite a surge in the stock as consumers stocked their pantries during the pandemic, GIS stock is down 10% in the last 12 months. However, the stock has been essentially flat in 2021. This is significant because the company has continued to post strong revenue and earnings at a time when many investors were concerned that revenue would decline.

However, analysts are projecting a 10% gain in the stock over the next 12 months. However, the company rewards shareholders with its dividend. It has raised the dividend in nine of the last 10 years and has what is considered one of the safest dividends in the industry.

About General Mills
General Mills, Inc engages in the manufacture and marketing of branded consumer foods sold through retail stores. It operates through the following segments: North America Retail, Europe & Australia, Convenience Stores & Foodservice, Pet and Asia & Latin America. The North America Retail segment includes grocery stores, mass merchandisers, membership stores, natural food chains, drug, dollar and discount chains and e-commerce grocery providers.Read More 

Current Price: $60.54
Consensus Rating: Hold
Ratings Breakdown: 1 Buy Ratings, 4 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $60.33 (0.3% Downside)


#5 - General Electric (NYSE:GE)

General Electric logo

One distinguishing feature of a defensive stock is that they are usually cash-generating machines. That wasn’t a statement that would have been attributed to General Electric (NYSE: GE) in recent years. But with the hiring of Larry Culp as the company’s CEO, the company is prioritizing cash flow. It was a strategy that Culp used when he held the same title at Danaher (NYSE: DHR).  And under Culp’s leadership, the company preserved $3 billion of cash as it weathered the pandemic.

However, cash preservation wasn’t Culp’s only goal. For many years, General Electric had run far afield in terms of its core businesses. Culp has helped streamline the company’s operations. And while its largest business is power turbines, it’s also involved in the health care sector. And that’s why the company is making this list.

GE stock is up over 80% in the last 12 months and is still going strong in 2021. The stock is up 21% for the year, outpacing the S&P 500 index over the same period.

About General Electric
General Electric Co engages in the provision of technology and financial services. It operates through the following segments: Power, Renewable Energy, Aviation, Healthcare, and Capital. The Power segment offers technologies, solutions, and services related to energy production, which includes gas and steam turbines, generators, and power generation services.Read More 

Current Price: $103.80
Consensus Rating: Buy
Ratings Breakdown: 8 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $115.69 (11.5% Upside)


#6 - Coca-Cola (NYSE:KO)

The Coca-Cola logo

The perpetual debate between Coca-Cola (NYSE: KO) and Pepsi (NASDAQ: PEP) extends into their role as favored defensive stock. Strictly based on financials, I could make a strong case for PEP stock. However, the company is currently the target of a class-action lawsuit regarding working conditions at one of its plants.

It’s unlikely that this will be a long-term headwind for the stock. However, when there are other options to choose from, I’ll go with them. And let’s face it, it’s not like KO stock is a bad choice. The company has been expanding into other beverage categories. That progress was stalled a bit due to the pandemic, but if the company’s recent earnings report is any indication, Coca-Cola will be just fine.

The company’s performance in the last year has been just okay. It’s up 16% in the last 12 months. However, investors (such as Warren Buffett) invest in Coke, in large part, for its dividend. And here the company continues to deliver as it has for the last 59 years.

About The Coca-Cola
The Coca-Cola Co is the nonalcoholic beverage company, which engages in the manufacture, market, and sale of non-alcoholic beverages which include sparkling soft drinks, water, enhanced water and sports drinks, juice, dairy and plant-based beverages, tea and coffee and energy drinks. Its brands include Coca-Cola, Diet Coke, Coca-Cola Zero, Fanta, Sprite, Minute Maid, Georgia, Powerade, Del Valle, Schweppes, Aquarius, Minute Maid Pulpy, Dasani, Simply, Glaceau Vitaminwater, Bonaqua, Gold Peak, Fuze Tea, Glaceau Smartwater, and Ice Dew.Read More 

Current Price: $53.89
Consensus Rating: Buy
Ratings Breakdown: 10 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $61.53 (14.2% Upside)


#7 - McDonald’s (NYSE:MCD)

McDonald

The last of the defensive stocks on this list is McDonald’s (NYSE: MCD). The iconic fast-food chain was working to develop the digital side of its business. And that paid off in a big way during the pandemic. MCD stock soared as the company kept its drive-thru windows open and the revenue followed.

That growth stalled in the first part of the year, but the stock has broken to a new record high since the company reported earnings in July. The company recently announced that it was going to be increasing employee pay from $11 to $17. This should help the company attract workers as it looks to open its dining room which remains mostly shut as of this writing.

And if investors needed a different reason to take a bite out of McDonald’s stock, they can look at the company’s dividend, which the company has increased in each of the last 45 years.

About McDonald's
McDonald's Corp. engages in the operation and franchising of restaurants. It operates through the following segments: U.S.; International Operated Markets, and International Developmental Licensed Markets and Corporate. The U.S. segment focuses its operations in the United States. The International Operated Markets segment comprises operations and franchising of restaurant in Australia, Canada, France, Germany, Italy, the Netherlands, Russia, Spain, and the U.K.Read More 

Current Price: $246.42
Consensus Rating: Buy
Ratings Breakdown: 26 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $258.90 (5.1% Upside)

 

A strategy to buying defensive stocks is to buy them before you need them. With the way the stock market is moving at the moment, it may be easy to think that it’s too late to buy defensive stocks. The Dow swung 900 points to the downside on July 19 only to recover all those losses, and then some, in the next 48 hours.

And yet, you can’t blame investors for feeling a little uncertain about a market that by many accounts is highly overvalued. Whenever the market does lurch downward, it’s only natural for investors to wonder if this is the start of a stronger correction. We can’t say when that will occur.

That’s a risk that every investor has to manage for themselves. One way to manage the risk is to invest in defensive stocks that will act as a hedge in your portfolio. And if you’d rather mitigate your risk even further, you can look at an exchange-traded fund (ETF) that tracks the S&P 500 index such as the Vanguard 500 Index Fund ETF (NYSEARCA:VOO).

7 Stocks That Still Have Upside For Investors to Buy

It can be fun to invest in some speculative stocks. But it should go without saying that those stocks shouldn’t make up the bulk of your portfolio. In fact, it’s important to find a few good stocks that make up the base of your portfolio. These are momentum stocks that are in a strong uptrend.

One way to find such stocks is to look at the most active stocks (or volume leaders). Shares of these companies are among the most traded or have the highest dollar volume of shares traded in a given trading day.

Any stock may crack this list from time to time (for example, when there’s new news about the company). However, stocks tend to find their way on this list consistently that bear watching. That’s because this list indicates that there is pressure among investors to buy or sell the stock. And that makes an investor’s decision very simple.

And that’s the reason we created this special presentation. The stocks on this list are among the most actively traded stocks on the market today. They also share a similar quality. They are coming off strong years in 2020 and seem to be showing some consolidation for another leg up.

View the "7 Stocks That Still Have Upside For Investors to Buy" Here.





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