The inflation data released on September 13 spooked markets as the S&P 500 and other constituents sold off. To top it all off, it seems that the property market is also experiencing a slowdown, and there are indications that consumer spending is also decreasing.
Entering the all-important fourth quarter of the year, news of layoffs is causing an additional strain on the markets. Therefore, looking to position a portfolio defensively could make sense for the remainder of the year.
Accordingly, Finbold analyzed the markets and identified three defensive stocks to buy for the second half of 2022.
McKesson (NYSE: MCK)
The firm offers four segments of its business, the US, International, Medical-Surgical solutions, and Prescription technology solutions. Their business is mostly unaffected by economic conditions offering healthcare supply management, oncology, specialty care, and healthcare IT solutions across the globe.
With a number of customers in the biotech sector, the shares offer growth along with the solid $68.8 billion in revenue they earned in 2021. MCK is part of the Health Care providers & services industry, with 129 other stocks outperforming 94% of them.
In the last month, MCK has been trading from $338.38 to $373.77, recently breaking below the 50-day moving average. Technical analysis indicates a support zone from $333.53 to $335.90 and a resistance zone from $371.02 to $373.85.
TipRanks analysts rate the shares a ‘strong buy,’ with the average price in the next 12 months predicted to reach reaching $395.67, 15.90% higher than the current trading price of $341.40, with eight of the nine experts advocating to ‘buy’ McKesson.
Realty Income (NYSE: O)
Also referred to as the monthly dividend company, favored by dividend investors, Realty Income is a real estate investment trust (REIT) that owns over 11,000 real estate properties under long-term net lease agreements with commercial clients.
Over its 53-year operating history, the firm has regularly paid out a dividend, for 627 consecutive common stock monthly dividends. The firm is an industry leader, and having a roof over a head or an office is a necessity regardless of the economic conditions, possibly making the firm recession-proof. However, rising interest rates may damage mortgage rates and hurt the prospect of the firm growing aggressively.
In the last month, O has been trading in the $65.01 to $73.95 range, with a negative short-term trend. Further, a support zone is between $64.67 to $64.87, and a resistance zone from $65.85 to $65.94.
TipRanks analysts rate the shares a ‘moderate buy,’ with the average price in the next 12 months tipped to reach $76.00, 16.19% higher than the current trading price of $65.41. Notably, out of the 12 TipRanks analysts, eight have a ‘buy’ and four a ‘hold’ rating.
Consolidated Edison Inc. (NYSE: ED)
Utility stocks often make up the basis of all defensive portfolios as they usually have wide moats that discourage competition from entering the business. Edison serves the New York area with a base of 3.5 million customers for their electricity business and 1.1 million customers for their natural gas business.
Furthermore, the firm is among the oldest publicly traded utility companies in the US. In addition, for 48 consecutive years, the firm offered at least one annual dividend increase for its shareholders.
In the last month, ED has been trading in a tight range between $97.44 and $102.21, remaining at the upper end of its 52-week range. A support zone is identified from $97.15 to $99.69, and a resistance zone from $100.85 to $101.92.
TipRanks analysts rate the shares a ‘moderate sell,’ predicting a downside in the next 12 months as the average price they see is $89.86, -10.11% lower than the current trading price of $99.97.
Regardless of whether growth stocks are in a portfolio, adding some defensive exposure should help balance the portfolio out and reduce volatility.
The above three stocks are by no means immune to volatility, but given their earnings, business moat, and industry they’re operating in, they should do well in the short to mid-term.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.