8 Safe Stocks to Buy as Wall Street Goes Defensive

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safe stocks to buy - 8 Safe Stocks to Buy as Wall Street Goes Defensive

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Seemingly at every turn, we can find any catalyst for a market downturn: rising tensions in Washington, unrest in the European Union and the ongoing Huawei controversy, just to name a few. Under these circumstances, you should consider front loading your portfolio with traditionally safe stocks to buy.

I’m not just making biased interpretations off the headlines as the evidence more than speaks for itself. Since the second half of this year, the Dow Jones Industrial Average has only gained a pedestrian 2%. On the other hand, secular investments such as consumer-staples stocks — as based on the Consumer Staples Select Sector SPDR Fund (NYSEARCA:XLP) — have comparatively skyrocketed.

Or take a look at utility stocks. Using the sector benchmark Utility Select Sector SPDR Fund (NYSEARCA:XLU), we find that this typically boring market segment has jumped to double-digit territory since the beginning of July. Clearly, the best stocks to buy right now are those benefitting from the pivot to safety.

Because of globalization, virtually all companies are vulnerable to recent negative headlines. At the same time, some companies perform better under duress due to consistent revenue streams or internally stable organizations.

Plus, you don’t want to fight the tape as the markets always win. Instead, try your hand at these eight safe stocks to buy:

Procter & Gamble (PG)

Safe Stocks to Buy on the Defensive: Procter & Gamble (PG)

For a pick among safe stocks to buy during this market storm, Procter & Gamble (NYSE:PG) is an obvious name. As a well-known manufacturer of common household goods, PG stock will essentially never go out of style. No matter how rough the economy gets, folks need to take care of themselves.

That said, I also like PG for its forward-thinking leadership team. Earlier this week, PG bought Walker & Co. for an undisclosed sum. The recently acquired firm specializes in razors and associated grooming products for minority consumers. Of course, this is a step toward inclusionary marketing, which is a positive for business and public perception.

But I support this decision because it aligns with demographic trends. Young Americans who are currently entering junior high school are majority non-white. Over time, businesses that overwhelmingly cater to whites will lose significant revenues. PG is taking a preventative course decades in advance, which also makes it one of the best stocks to buy.

Hormel Foods (HRL)

Safe Stocks to Buy on the Defensive: Hormel Foods (HRL)

Consumer-staples stocks are a natural choice for safe stocks to buy, especially for food production and distribution companies. After all, everyone must eat. Unfortunately, the logic hasn’t paid out for most players in this segment.

A major headwind is the uncertainties surrounding the trade war. Initially, the Trump administration appeared to make headway with China. The Huawei controversy has put those sentiments on hold. This obviously hurts exporting opportunities. In addition, fluctuating fuel prices have negatively impacted the distribution side of the business.

But one name stands out from the crowd: Hormel Foods (NYSE:HRL). Thanks to strong brand development and acquisitions, HRL stock has gone against the grain. Year-to-date, shares have jumped nearly 27%. With the competition hurting, I expect Hormel to further impose its weight.

Johnson & Johnson (JNJ)

Safe Stocks to Buy on the Defensive: Johnson & Johnson (JNJ)

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When it comes to figuring out which are the best stocks to buy during uncertain periods, you keep it simple. For me, this means researching sectors that are heavily exposed to consistent, secular demand, such as healthcare stocks. Within this particular segment, I’m really liking Johnson & Johnson (NYSE:JNJ).

My faith has not gone unrewarded. After having a rough go in the first half of the year, JNJ stock has soared back to life in the second half. Since July’s opening price, shares have rocketed over 23%. Not only that, JNJ pays a relatively generous dividend at 2.4%.

Moreover, I agree with our own Bret Kenwell, who recently wrote that “JNJ has an A+ balance sheet and a business model that, while not totally impervious to economic trends, holds its own in good times and bad times.” Plus, with its multi-faceted revenue streams, JNJ is easily one of your top safe stocks to buy.

CVS Health (CVS)

Safe Stocks to Buy on the Defensive: CVS Health (CVS)

As I just mentioned above, safe stocks to buy are usually no-brainers: you pick the businesses from which consumers cannot simply walk away. Under this basic definition, healthcare stocks like CVS Health (NYSE:CVS) certainly qualify. I’m not sure I know anybody who will skimp out on cold medicine because of the economy.

But beyond this obvious take, CVS stock could radically transform the healthcare industry, according to a CNBC report. Late-last month, the company closed its $70 billion buyout of health-insurance giant Aetna. Additionally, CVS has also acquired pharmacy-related businesses, such as Caremark and MinuteClinic.

While regulatory hurdles remain with the Aetna buyout, management’s intentions are clear: they want to disrupt healthcare by offering a one-stop shop. The move also sends a powerful message to its rivals in the burgeoning sector.

National Grid (NGG)

Safe Stocks to Buy on the Defensive: National Grid (NGG)

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In case you missed my earlier write-up about utility stocks, this is the key sector as you pivot to safety. For one thing, utility companies typically offer generous and reliable dividends. As Wall Street rolls over from risky growth names to equity safe-havens, this market segment should see sustained optimism.

And if you’re looking for a dividend friendly organization with a stable business model, consider National Grid (NYSE:NGG). Featuring a 7.7% yield, NGG stock can help you ride the present turbulence. But unlike your typical high-yield traps, National Grid has solid financials, including above-average profitability and growth metrics.

Better yet, the company operates robust businesses in the U.S. and the U.K. Stateside, it focuses on the lucrative east coast market, which has recently suffered an early start to cold weather. Across the Atlantic, NGG oversees its electrical and gas-transmission services.

Sempra Energy (SRE)

Despite the utility sector’s penchant for portfolio protection, one conspicuous dilemma exists: almost everyone knows about it. So many companies within this sector have soared, making it difficult to say that they’re the best stocks to buy.

That’s why I think Sempra Energy (NYSE:SRE) affords the right mix between capital-gains potential and a strong dividend yield. Contrary to the competition, SRE stock just hasn’t gained much traction. While shares are up double-digits on a YTD basis, they’ve gone virtually nowhere throughout the second half.

However, I think the markets will eventually turn around to SRE. For starters, it features a 3% dividend yield, providing you some downside protection. Moreover, Sempra Energy is primarily focused on the lucrative Southern California market, in addition to Arizona and Texas. They also have expansionary plans, steadily moving toward the east coast.

Finally, Sempra is moving southbound into Central and South America. With the region’s positive demographic trends, it represents long-term potential for SRE stock.

Walmart (WMT)

Safe Stocks to Buy on the Defensive: Walmart (WMT)

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Ordinarily, retail stocks don’t fit the description as being safe stocks to buy during a market downturn. But the trend in the retail sector, along with other industries, is moving toward consolidation. In a society that has grown accustomed to immediate conveniences, specialization usually doesn’t pay.

That’s why I think Walmart (NYSE:WMT) remains one of your best stocks to buy right now. Obviously, WMT represents many consumers’ one-stop shop for a range of diverse needs. Whether it be groceries, toiletries or the latest video game, the iconic big-box retailer has you covered.

More importantly, management remains hungry. You’d expect an industry stalwart to rest on its laurels and do just enough. Instead, they’re moving into disparate areas such as healthcare and food deliveries. I appreciate that they’re taking nothing for granted, which provides shareholders with longer-term confidence.

Amazon (AMZN)

Safe Stocks to Buy on the Defensive: Amazon (AMZN)

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Anyone can make the case that Amazon (NASDAQ:AMZN) is among the best stocks to buy for the long run. But as a candidate for safe stocks to buy in this uncertainty? I’m sure many folks are rolling their eyes.

I acknowledge that AMZN stock has absorbed a 17% beatdown since the beginning of October. Conspicuously, Amazon is the only company on this list that doesn’t pay a dividend … not one cent! At the same time, I think the weakness in its pricing opens up doors for contrarians.

While Amazon specializes in cyclical, consumer-discretionary sales, the bottom line is this: Americans are increasingly turning digital for all their consumption activities. No wonder management has acquired so many companies across multiple industries: they recognize that they own the most popular platform. What they’re doing now is securing as many individual channels.

Regardless of the fact that AMZN doesn’t fit directly into the safe stocks to buy category, you can’t ignore its path to world domination.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.


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