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4 “Defensive” Stocks to Sell Now

Defensive stocks are supposed to hold up in a downdraft. These ones won't.

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ConAgra Foods (CAG)

On a list of consumer staples, you can always expect food to be near the top.

ConAgra Foods (NYSE: CAG)ConAgra Foods (CAG) makes some hard-core low-end necessities like Chef Boyardee, Health Choice, Hebrew National, Slim Jim, Peter Pan, and Wesson. You probably have some of their products at home right now. I think the mistake the financial media makes, which investors gobble up, is using the logic that this is a hundred-year-old company that sells food, and everyone needs food, so by definition it’s a defensive stock. That isn’t a real investment thesis, though.

CAG’s 3.1% yield is not too shabby, but you can find that same yield with a lot less risk than a stock with earnings growing at 8% but trading at a P/E of 15. Contrast this with McDonalds (MCD) which pays 3.3%, and has a solid global market. My cousins own franchises, and as they say, “In a good economy, we do well. In a bad economy, we do great.” That’s a real defensive stock.

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