When Defensive Stocks Fail Too (PEP, KO, BUD, TAP, KFT, CAG, CPB, HRL, MCD, MO, PG, CL, MRK, JNJ)

Investing

Published: June 18, 2008 3:38 pm

It used to be that DEFENSIVE STOCKS were the way to go during periods of uncertainty and during times of market sell-offs. But now that isn’t even working out. After we looked at our first line defensive stocks only a piss poor reading of 3 out of 14 were up on the day. Sure the DJIA dipped under 12,000 briefly and closed down 131.24 at 12,029.06, and the overall trend of the market is bad and feels like it wants to go worse. To make matters worse, one of the three that are up was up because it is a takeover play currently.

PepsiCo (PEP)             $65.06 -$0.81 (-1.23%)
Coca-Cola (KO)             $53.16 -$0.80 (-1.48%)
Anheuser-Busch (BUD) $61.90 +$0.70 (+1.14%)
Molson-Coors (TAP)       $55.53 +$0.70 (+1.28%)
Kraft (KFT)                      $30.00 -$0.32 (-1.06%)
ConAgra (CAG)             $22.01 -$0.44 (-1.96%)
Campbell Soup (CPB)    $33.51 -$0.25 (-0.74%)
Hormel (HRL)                $35.75 -$0.41 (-1.13%)
McDonalds (MCD)          $58.21 -$1.00 (-1.69%)
A’tria (MO)                      $20.71 -$0.01 (-0.05%)
P&G (PG)                      $65.00 -$0.80 (-1.22%)
Colgate Palmolive (CL)    $71.71 -$0.68 (-0.94%)
Merck (MRK)                   $34.86 +$0.18 (+0.52%)
J&J (JNJ)                         $64.44 -$1.15 (-1.75%)

In an environment where consumers are spending less and less it seems that even the safe haven stocks aren’t immune as they once were. Every one of these operations is suffering from issues that weren’t present, or not as much, in 2007 and 2006 such as a weaker consumer, higher energy costs, higher materials costs, and higher delivery/transport cost. At a time where the market wants to buy agricultural stocks, energy and alternative energy, and defense/war stocks, the traditional names just aren’t working. Pity.

Jon C. Ogg
June 18, 2008

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