If you want to enhance the resilience of your portfolio to make it stronger, the three defensive stocks listed below may suit you when economic conditions deteriorate.
These stocks have kept on generating 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. Furthermore, investing in these stocks, as of the time of writing, implies the payment of an affordable cost as indicated by compelling price-earnings ratios versus the S&P 500's ratio of 42.64.
Wall Street is also positive about these defensive stocks, as sell side analysts have issued recommendation ratings for them in the hold to strong buy range.
Walmart Inc
The first stock to consider is Walmart Inc (WMT, Financial), a Bentonville, Arkansas-based global discount stores giant.
The company saw its trailing 12-month earnings per diluted share ($4.75 as of the January 2021 fiscal quarter) grow by 1% per annum over the past five years. The dividend per share for the trailing 12 months ($2.16 as of the January 2021 fiscal quarter) grew by 2% per annum over the past five years.
GuruFocus assigned a financial strength rating of 6 out of 10 and a profitability rating of 7 out of 10 to the company.
The share price closed at $137.91 on Monday for a market capitalization of $388.01 billion, a price-earnings ratio of 29.16 and a 52-week range of $117.01 to $153.66.
On Wall Street, as of April, the stock has eight strong buy recommendation ratings, seven buy recommendation ratings, 15 hold recommendation ratings, one underperform recommendation rating and one sell recommendation rating. The average target price is $159.38 per share.
Coca-Cola Co
The second stock to consider is Coca-Cola Co (KO, Financial), an American beverage giant.
The company saw its trailing 12-month earnings per diluted share ($1.79 as of the December 2020 quarter) grow by nearly 9% every year over the past five years. The dividend per share for the trailing 12 months ($1.64 as of the December 2020 quarter) grew by 4.5% per year over the past five years.
GuruFocus assigned a financial strength rating of 5 out of 10 and a profitability rating of 7 out of 10 to the company.
The stock traded at $53.66 at close on Monday for a market capitalization of $231.33 billion, a price-earnings ratio of 32.13 and a 52-week range of $43.2 to $54.93.
On Wall Street, as of April, the stock has four strong buy recommendation ratings, seven buy recommendation ratings, 13 hold recommendation ratings and one underperform recommendation rating, for an average target price of $59.36 per share.
PepsiCo Inc
The third stock to consider is PepsiCo Inc (PEP, Financial), a Purchase, New York-based manufacturer of soft drinks and snacks.
The company saw its trailing 12-month earnings per diluted share ($5.12 as of the December 2020 quarter) grow by 9.4% every year over the past five years. The dividend per share for the trailing 12 months ($4.02 as of the December 2020 quarter) grew by 8.2% every year over the past five years.
GuruFocus assigned a financial strength rating of 5 out of 10 and a profitability rating of 8 out of 10 to the company.
The share price was $143.36 at close on Monday for a market capitalization of $198.07 billion, a price-earnings ratio of 26.55 and a 52-week range of $126.53 to $148.77.
On Wall Street, as of April, the stock has two strong buy recommendation ratings, 10 buy recommendation ratings and 10 hold recommendation ratings for an average target price of $154.78 per share.
Disclosure: I have no positions in any securities mentioned in this article.
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