Over the last month, the market has seen a myriad of ups and downs. When you look a little closer, you will find that there have been more downs than ups. I see a few other indicators pointing to lower stock prices, so let’s look at a few defensive style names that carry a high Zacks Rank.
To increase our odds of success, I am picking these Zacks Rank #1 (Strong Buy) and Zacks Rank #2 (Buy) stocks from a screen that looks for increasing price and increasing volume.
This is one of my favorite trading screens to look at as it shows me stocks that investors have been bidding up and have improving fundamentals (in the form of higher earnings estimates).
There are 5 food stocks that showed up on the screen, but I am only going to point out the two that are Zacks Rank #1 (Strong Buy).
B&G Foods, Inc. (BGS) is a Zacks Rank #1 (Strong Buy) and is coming off a very solid earnings report in late April. The company topped the Zacks Consensus Estimate of 51 cents per share by 14 cents per share for a 27% positive earnings surprise. Wall Street liked the numbers and sent the stock higher by 22% in the session following the release. Management pointed to the solid performance of Green Giant, a unit that was purchased from General Mills, Inc. (GIS) for $765 million in September of last year.
Fresh Del Monte Produce Inc (FDP) is also a Zacks Rank #1 (Strong Buy) and is coming off a titanic beat of the Zacks Consensus Estimate. The company reported EPS of $1.57 when the Zacks Consensus Estimate was calling for 83 cents per share. That translates into a 74 cents per share beat and an 89% positive earnings surprise. The stock advanced approximately 8.5% in the session following the release.
Both food stocks are considered defensive in nature, but the recent earnings beats make the story that much sweeter. A quick look at the charts for both stocks shows the trend of increasing price and volume and that alone should get you interested in these Zacks Rank #1 (Strong Buy) stocks.
I tend to focus on aggressive growth stocks, but this article is focused on picking defensive style names. Along with the food names, a sector should pop into your head when speaking about defensive investing is Utilities.
Avangrid Inc (AGR) is a Zacks Rank #1 (Strong Buy) stock that is coming off a solid beat of the Zacks Consensus Estimate. The company reported a 4 cents per share beat for a 6.8% positive earnings surprise near the end of April.
The company operates eight electric and natural gas utilities serving 3.1 million customers in Connecticut, Maine, Massachusetts, and New York.
Finally, this might be considered that defensive of a play, but I like the idea of including Petmed Express Inc (PETS) in this list. The basic idea of why this stock is here is that people will gladly go without some discretionary purchases to make sure their pet has proper medication.
PETS is also coming off a solid performance in the most recent quarter. The company beat the Zacks Consensus Estimate on top and bottom. Revenue of $55M was ~$6M more than expected for an 11% positive revenue surprise. EPS of 27 cents per share was 3 cents per share better than expected for a 12.5% positive earnings surprise.
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Brian Bolan is a Stock Strategist for Zacks.com. He runs Stocks Under $10 Investor service where he looks for low priced stocks that are seeing positive earnings estimate revisions. This popular service has seen some strong early returns and offers a free trial via the Zacks Ultimate service.
Brian also runs the brand new Zacks Game Changers where he looks for stocks that are disrupting their industries and reaping big gains.
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