If you want to increase the resilience of your portfolio to make it stronger, the following three defensive stocks may be suitable 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.
Furthermore, these stocks also offer compelling price-earnings ratios compared to the S&P 500's 44.59, and Wall Street sell-side analysts have issued recommendation ratings for them in the hold to strong buy range.
Costco Wholesale Corp
The first stock investors may want to consider is Costco Wholesale Corp (COST, Financial), an Issaquah, Washington-based operator of warehouse discount stores located in the U.S. and internationally.
The company saw its trailing 12-month earnings per diluted share ($9.78 as of the most recent quarter) increase by 12.3% per annum over the past five years. The dividend per share for the trailing 12 months ($2.80) increased by 12.5% per annum over the past five years.
GuruFocus assigned a financial strength rating of 7 out of 10 and a profitability rating of 8 out of 10 to the company.
The share price closed at $383.45 on Monday for a market capitalization of $169.69 billion, a price-earnings ratio of 39.21 and a 52-week range of $293.83 to $393.15.
On Wall Street, as of May, the stock has seven strong buy recommendation ratings, 11 buy recommendation ratings and 11 hold recommendation ratings. The average target price is $395.26 per share.
Unilever PLC
The second stock investors may want to consider is Unilever PLC (UL, Financial), a London-based international consumer goods company.
The company saw its trailing 12-month earnings per diluted share ($2.47 as of the most recent quarter) increase by nearly 8% per annum over the past five years. The dividend per share for the trailing 12 months ($1.97) rose by 9% per 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 stock traded at $60.53 at close on Monday for a market capitalization of $158.72 billion, a price-earnings ratio of 22.34 and a 52-week range of $50.76 to $63.89.
On Wall Street, as of May, the stock has one hold recommendation rating with a target price of $70 per share.
Mondelez International Inc
The third stock investors may want to consider is Mondelez International Inc (MDLZ, Financial), a Chicago, Illinois-based global producer and seller of snack food and beverage products.
The company saw its trailing 12-month earnings per diluted share ($2.64 as of the most recent quarter) grow by 0.3% every year over the past five years. The dividend per share for the trailing 12 months ($1.23) increased by 13.9% per annum 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 share price was $63.68 at close on Monday for a market capitalization of $89.45 billion, a price-earnings ratio of 24.12 and a 52-week range of $49.38 to $64.02.
On Wall Street, as of May, the stock has four strong buy recommendation ratings, 13 buy recommendation ratings and four hold recommendation ratings for an average target price of $68.43 per share.
Disclosure: I have no positions in any securities mentioned in this article.
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