Stocks are still correcting as economic data keeps coming in weaker and weaker. Now the media keeps routinely talking up what we called a supporting call for QE3. Please, no QE3! Still, the job of a financial site is to either help make you money or to help save you money. One of the best sectors that investors can own right now is the so-called “Defensive Stock Sector.” This strategy gives what is supposed to be a fairly stable market price, high income, and less volatility, while still giving equity returns when the market recoveries.
We have identified the best of each sector inside the defensive sector of our 20 top defensive stocks. The “best of the best” is a simple solution and is based solely upon how well each is holding up against recent highs. We have then offered a review and outlook on each, with our own color as well. In beverages, Pepsico, Inc. (NYSE: PEP) is the winner. In food, ConAgra Foods, Inc. (NYSE: CAG) is the winner. Altria Group, Inc. (NYSE: MO) is the winner in tobacco. The winner in consumer products is Colgate-Palmolive. Drugs and healthcare has a surprise winner in Johnson & Johnson (NYSE: JNJ). We also took a look at American Water Works Company, Inc. (NYSE: AWK).
Pepsico, Inc. (NYSE: PEP) is the winner over rival The Coca-Cola Co. (NYSE:KO). Perhaps it is that Pepsi keeps diversifying away from soft drinks into snacks and expanding internationally. At $70.29, Pepsi is down only 2.2% from its 52-week high of $71.89. Its market cap is a cool $111 billion and analysts still have a target of $78.21. Pepsi offers investors a dividend of roughly 2.9%.
In food, ConAgra Foods, Inc. (NYSE: CAG)is the surprise winner so far for defensive investors. At $25.29, the food giant is down only 2.05% from the 52-week high of $25.82. Its market cap is “only” $10.3 billion. Thomson Reuters has a consensus price target of $26.60 and it pays a 3.7% dividend yield. You gotta eat.
Altria Group, Inc. (NYSE: MO) is the winner in tobacco. Imagine winning by killing your customers. At $27.92, Big U.S.-Tobacco is down only 0.6% from its 52-week high and analysts have a price target objective of $26.83 even if some are much higher. Altria’s market cap is over $58 billion and the dividend yield is 5.4%.
The winner in consumer products is Colgate-Palmolive Co. (NYSE: CL). At $86.91, this one is down only 0.77% from its 52-week high of $87.58 and its price target by analysts is $84.79. The market cap is almost $42.5 billion and the consumer products giant gives investors a dividend yield of close to 2.7%.
Johnson & Johnson (NYSE: JNJ) has had more recall problems and its stock has not gone anywhere for long enough that it was a shock to see. Still, this is the most defensive of the Drugs & Healthcare group of defensive stocks. J&J trades at $66.48, is down only 1.3% from its 52-week high of $67.37, and analysts have a consensus price target of $69.47. J&J has a mega-cap market capitalization of $182 billion and has a dividend yield of close to 3.4%. Imagine this… recalls are good.
American Water Works Company, Inc. (NYSE: AWK) is one of our favorite stocks that we support on any real pullback due to its great water monopolies on so many local markets. At $29.61, this one is down 3.55% from its 52-week high of $30.70 and it has a consensus price target of $31.19. The market cap here is only about $5.2 billion and it gives a dividend yield of about 3.00%. It really is true, you cannot live without water. Maybe investors can’t either.
They call these defensive stocks for a reason. None of these defensive stock winners are down as much as the broader DJIA and S&P from the 52-week highs, as the DJIA is down now almost 5% from its 52-week high and the S&P is down about 4.1% from its 52-week high.
JON C. OGG
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