Concerns around a potential recession continue to remain high, counteracting some rather bullish sentiment to start Donald Trump’s second term. Expectations around how this growth-oriented presidency could boost business activity (via tax cuts and deregulation) led to certain stocks in specific sectors skyrocketing in value. Many investors can think of the top names exposed to the so-called “Trump bump” (ahem, Tesla (NASDAQ:TSLA | TSLA Price Prediction) comes to mind) as poignant examples of how quickly and aggressively the market can price in new information.
However, with tariffs and other catalysts which are not beneficial to growth taking center stage for many investors, the question of course is whether these headwinds to growth will more than offset the bullish narrative to start the year. At least for now, this certainly seems to be the case, with the market still down considerably on the year, though off its correction lows.
That said, no matter which side of the argument one finds themselves on (whether they side with the recession odds of JPMorgan increasing its estimate to 40% or Goldman Sachs at 20%, it’s clear that there’s heightened risk out there right now. For those looking to protect their portfolios from downside risk, here are three companies I’ve got on my radar I think are worth considering in this present environment.
Berkshire Hathaway (BRK-B)
Warren Buffett at one of his annual meetings
Most investors would argue that in terms of the most successful value investors of all time, Berkshire Hathaway’s (NYSE:BRK-B) Warren Buffett has to be on the Mount Rushmore for most investors.
Buffett’s investing style is one that should bode well for investors with a long-term investing time horizon. The company is an investor in a wide range of businesses spanning economically defensive businesses that tend to do well as the economy grows over time (think railroads). In addition, Berkshire has a sizable interest in a wide range of publicly-traded companies, which the company has been paring back of late.
Buffett’s cash position is actually the highest it’s ever been, at $334 billion. That’s a lot of dry powder to put to work, if and when a recession hits and valuations fall. That’s what Berkshire Hathaway seems intent on exploring, rather than paying today’s prices for equities across the board.
So, for investors looking to stay in the market, but add a more defensive tilt to one’s portfolio, this is a bulletproof stock I think is worth considering on any major dips (such as the one we just had).
Altria Group (MO)
Altria Group (NYSE:MO) is certainly a defensive stock that isn’t for everyone. The Marlboro maker has seen cigarette sales drop dramatically in its key markets (a great thing for the public), though the company has continued to spit off tremendous cash flow over the long-term as a result of its core business. Of late, the company has been reinvesting these cash flows into other high-growth areas of the business, choosing to focus on the company’s smokeless and tobacco-free portfolio of products.
This area of the business has surged, leading to continued growth even as the company’s core business remains in decline. Overall, most investors view Altria as a top dividend stock in this environment, with a dividend yield that continues to hover around the 7% range. In this environment, finding yield-producing investments of this quality isn’t easy, and it’s likely at least due in part to the relative lack of investor demand with companies in the tobacco market.
I think the company’s high cash flow yield will likely remain, though defensive stocks could catch a bid and multiples could expand further in the coming years, if we do see a recession play out. Accordingly, this remains among my top picks for those seeking stability in this volatile environment.
Lockheed Martin (LMT)
Lockheed Martin (NYSE:LMT) is a global aerospace and defense company specializing in military aircraft, missile systems, space technology, and cybersecurity. The company’s business units are as vast as they are unique, with Lockheed’s core aeronautics and missilies/fire control business units supplemented by mission systems and space operations.
This is a long-standing defense stock investors often look to in times of turmoil. And given the amount of increasing geopolitical uncertainty in the marketplace, it’s understandable why ministers may want to take a look at the F-35 fighter jet, JASSM, Patriot PAC-3, and Black Hawk helicopter maker.
While Lockheed’s 2024 sales were strong (and the company posting a record $176 billion order backlog), fourth-quarter revenue and earnings missed expectations heading into 2025. Moreover, the company’s aeronautics segment saw a boost from resumed F-35 deliveries, though supply chain delays in cockpit upgrades may extend into 2026. Despite steady revenue growth of 3.9% to 5.4% expected in 2025, adjusted EPS is projected to decline by 3%. Additionally, uncertainty looms over future defense contracts as U.S. military aid to Ukraine faces restrictions.
That said, I think Lockheed Martin will continue to view 2025 as a transitional year, positioning itself for stronger earnings in 2026 and beyond. Its “21st Century Security” initiative focuses on integrating AI and cybersecurity, supporting long-term growth. The recent stock decline has lowered its valuation, with shares trading at a forward price-earnings ratio of around 17-times, below its 10-year average.
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