If you want to increase the resilience of your portfolio to make it stronger, the following three defensive stocks may suit you when economic conditions deteriorate.
These stocks have continued to generate earnings and dividends during economic recessions as they offer goods and services on which people are not disposed to cut their spending in times of financial distress. Also, investing in these stocks, as of the time of writing, implies the payment of a tolerable cost as indicated by compelling price-earnings ratios compared to the S&P 500's ratio of 40.43.
Sell-side analysts on Wall Street are positive about these stocks as they have issued recommendation ratings that fall between a hold and strong buy.
Philip Morris International
The first stock to consider is Philip Morris International Inc. (PM, Financial), a New York-based tobacco giant.
The company saw its trailing 12-month earnings per diluted share ($5.17 as of the December 2020 quarter) increase by 3.3% per annum over the past five years. The dividend per share for the trailing 12 months ($4.74 as of the December 2020 quarter) increased by 3.5% per annum over the past five years.
GuruFocus assigned a financial strength rating of 4 out of 10 and a profitability rating of 8 out of 10.
The share price closed at $90.99 on Monday for a market capitalization of $141.81 billion, a price-earnings ratio of 17.61 and a 52-week range of $66.85 to $91.25.
On Wall Street, as of March, the stock has two strong buy recommendation ratings, seven buy recommendation ratings and nine hold recommendation ratings for an average target price of $98.54 per share.
Target
The second stock to consider is Target Corp. (TGT, Financial), a Minneapolis-based operator of nearly 1,900 discount stores in the U.S. where consumers can find a large assortment of consumer defensive goods, including groceries, apparel, home products, toys and electronics.
The company saw its trailing 12-month earnings per diluted share ($8.65 as of the January 2021 fiscal quarter) increase by 10.2% per annum over the past five years. The dividend per share for the trailing 12 months ($2.68 as of the January 2021 fiscal quarter) increased by 4.2% per annum over the past five years.
GuruFocus assigned a financial strength rating of 6 out of 10 and a profitability rating of 8 out of 10.
The stock traded at $198.21 at close on Monday for a market capitalization of $98.83 billion, a price-earnings ratio of 22.91 and a 52-week range of $90.17 to $201.96.
On Wall Street, as of March, the stock has a median recommendation rating of a buy and an average target price of $202.16 per share.
Amgen
The third stock to consider is Amgen Inc. (AMGN, Financial), a Thousand Oaks, California-based drug major.
The company saw its trailing 12-month earnings per diluted share ($12.31 as of the December 2020 quarter) increase by 11.4% per annum over the past five years. The dividend per share for the trailing 12 months ($6.40 as of the December 2020 quarter) increased by 14.6% per annum over the past five years.
GuruFocus assigned a financial strength rating of 4 out of 10 and a profitability rating of 9 out of 10.
The share price was $254.96 at close on Monday for a market capitalization of $147.26 billion, a price-earnings ratio of 20.71 and a 52-week range of $194.21 to $276.69.
On Wall Street, as of March, the stock has three strong buy recommendation ratings, seven buy recommendation ratings and 15 hold recommendation ratings for an average target price of $255.41 per share.
Disclosure: I have no positions in any securities mentioned in this article.
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