Stock Tickers: KO, MRK, PG, CAG, BUD, HRL, CL, MO, MCD, KFT, NVO, WTR

If you are a long-term bull and aren’t feeling panic after seeing a huge down day (of over 400 DJIA points earlier), you will be looking at today’s huge drop as another great chance to get in.  If you can find any technical comfort in the VIX, here’s our earlier note today regarding the VIX and the past extreme levels.  You’ll also probably look for defensive companies that are at least perceived to have a sort of ‘quality premium’ and lack of credit risks to their models.

This list has been modified from a prior list of 20 Defensive Stocks we provided earlier this year during the first mini-meltdown, with some tweaking to take current ‘credit risks’ into consideration.  Remember, these are usually the ones you eat, drink, or smoke…..

Here is a hit list from that original larger group with the leveraged names taken out to reflect today’s "risk-base" in the decision making.  There is no specific order to any of these, and obviously some of their direct competitors could just as easily be included.  This is just a hypothetical list, and everyone has to do their own homework.  Also keep in mind that even these names get hit when the market reacts this poorly.  Here are the names:

Coca-Cola (NYSE:KO)….does anyone ever stop drinking Coke or water?

Merck (NYSE:MRK)….drug king did well on last earnings.

Proctor & Gamble (NYSE:PG)….they get into your pocketbook regardless of the market.

ConAgra (NYSE:CAG)….food giant that is fairly valued.

Anheuser Busch (NYSE:BUD)….if you drink alchohol, you only drink more when things are bad.

Hormel (NYSE:HRL)….canned meats, deemed on the cheap.  Spam is a delicacy soemwhere.

Colgate-Polmolive (NYSE:CL)….they get into your pocketbook regardless of the market.

Altria (NYSE:MO)….who says smoking is all bad?  Product kills, but people insist on buying.

McDonalds (NYSE:MCD)….best fast food play off the mid to lower income, and they won’t always eat at home regardless.

Kraft (NYSE:KFT)…. maybe it’s too tied to activists, Buffett, Phillip Morris, or whatever, but it’s monster play in the sector.

Here are a couple more picks from the original second-line of defensive stocks, but this takes out some of the ‘perceived’ riskier names tied to financial impacts and the like:

Novo Nordisk (NYSE:NVO)….you won’t be seeing any diabetics cut their insulin treatments next week.

Aqua America (NYSE:WTR)….largest independent water and waste water play, although high P/E ratio.

Jon C. Ogg
July 26, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.

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