It seems hard to imagine that investors would get excited about very much at all when the market has slid this far south of late. Still, many investors are treating this as a pullback, because the trend for four years now is to buy every market sell-off.
Some investors are looking at value stocks, and others are going defensive. The stocks that have limited business cycles are a great focus for investors in a time of worry. These are four of the very defensive stocks we monitor that are either ignoring the market sell-off or are not down anywhere near as much as the broad market.
As of 1:10 Eastern Time, the S&P 500 was down 2.1% (-43 points) at 1,992 and the DJIA was down 2.1% (-364) at 16,626. That will put some of these other drops in perspective.
Altria Group Inc. (NYSE: MO) is the domestic play for tobacco, so the core business has limited currency impacts and does not have to worry about devaluation in China or what is happening in Europe. At $54.75, Altria shares were actually up three cents on the day. Analysts have a consensus price target of $58.89, and the 52-week trading range is $42.43 to $56.70. We expected Altria’s dividend to grow ahead, and in fact it has. The board raised the dividend more than 8%, representing a yield of about 4.1%.
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American Water Works Co. Inc. (NYSE: AWK) was down by only 12 cents at $54.07. This is the biggest, best run water utility in America, and chances are high that its water is going to be in demand here whether China can afford our goods or not. American Water has a yield of 2.5% that is expected to keep rising, and its national footprint insulates it from some of the woes of California. Shares of American Water Works were down 0.2% at $54.08. The stock has a consensus price target of $58.00 and a 52-week range of $47.58 to $57.48.
Duke Energy Corp. (NYSE: DUK) was actually up on the day, in part due to the Fed rate hikes believed to be pushed out ahead. This is the largest utility in America, with a $53 billion market cap. It has a big 4.3% yield and a share price that is already down over 13% from its 52-week high. Duke’s stock was up 0.4% at $77.06. The consensus analyst price target is $79.65, and the 52-week range is $70.24 to $89.97.
Merck & Co. Inc. (NYSE: MRK) was doing much better than its peers, although was still negative on the day. Merck’s patent expiration issues, along with the rest of Big Pharma, are well known, and the 3% yield is still attractive here. Shares of Merck were down 0.6% at $56.65 in mid-afternoon trading, but its stock was actually up on the day earlier. The consensus price target is $65.65. The 52-week range is $52.49 to $63.62.
As a reminder, true sell-offs drag down even the best companies. Sometimes there are just very few safe places to hide outside of short-term Treasuries.
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