U.S. equities have suffered from another bout of harrowing volatility this week as investors scramble to survive this bear market. The Dow Jones Industrial Average is threatening to fall below its multi-month support level to return to lows not seen since the beginning of the year. If those February lows are violated, watch for a possible reversal of much of the 2017 Trump tax cut rally.
The catalysts are familiar. Worries about U.S.-China trade relations. Worries about Federal Reserve policy tightening. An inversion of parts of the Treasury yield curve, one of the strongest signals a recession is coming.
And while many areas of the market are being bombed out — especially one-time momentum favorites like the FAANGs — defensive areas are catching a bid. Nice rallies are being enjoyed, particularly by pharmaceutical stocks. Here are seven non-cyclicals worth a look for investors surviving a bear market:
Pfizer (PFE)
Shares of Pfizer (NYSE:PFE) are testing new highs riding support from its 50-day moving average. Already up 25% from the lows seen in July thanks to a series of regulatory and clinical wins. The rise comes despite a downgrade by BMO Capital Markets analysts in November.
The company will next report results on Jan. 29 before the bell. Analysts are looking for earnings of 64 cents per share on revenues of $13.7 billion. When the company last reported on Oct. 30, earnings of 78 cents per share beat estimates by 3 cents on a 1% rise in revenues.
Merck (MRK)
Merck (NYSE:MRK) shares have been enjoying a powerful, unbroken uptrend out of the lows set earlier in the year, which makes it an ideal stock for investors that are surviving a bear market. From a low of $52 last touched in April, shares have gained 54% to test above the $80-a-share level. Shares recently got a boost on news the company has begun a submission to the FDA for Ebola vaccine V920 under the regulator’s Breakthrough Therapy Designation program.
The company will next report results on Feb. 1 before the bell. Analysts are looking for earnings of $1.04 per share on revenues of $11 billion. When the company last reported on Oct. 25, earnings of $1.19 per share beat estimates by 5 cents on a 4.5% rise in revenues.
Eli Lilly (LLY)
Like Merck, shares of Eli Lilly (NYSE:LLY) have enjoyed a powerful uptrend so far this year, up nearly 65%. A rotation into defensive areas by traders and investors abandoning names like Netflix (NASDAQ:NFLX) and Facebook (NASDAQ:FB) is part of the motivation. But there has also been a fading of concern about politicians taking action against high drug prices.
The company will next report results on Feb. 5 before the bell. Analysts are looking for earnings of $1.36 per share on revenues of $6.4 billion. When the company last reported on Nov. 6, earnings of $1.39 beat estimates by 4 cents on a 7.1% rise in revenues.
Procter & Gamble (PG)
Shares of consumer staples icon Procter & Gamble (NYSE:PG) are up by a third from the lows seen in May after recovering from only the second excursion below its 200-week moving average since the bear market ended in 2009. Last month, the company announced a reorganization that simplifies the management structure and should allow for more nimbleness.
The company will next report results on Jan. 18 before the bell. Analysts are looking for earnings of $1.21 per share on revenues of $17.2 billion. When the company last reported on Oct. 19, earnings of $1.12 beat estimates by 3 cents on a 0.2% rise in revenues.
Duke Energy (DUK)
Shares of electric utility Duke Energy (NYSE:DUK) are up nearly 30% from the lows seen in June, pushing to new highs. The company is a quiet holding, and has only been in the news in relation to things like damage to parts of its electric grid in the wake of Hurricane Michael in Florida. When it takes an act of God for a company to get in the news, you now its a defensive, non-cyclical holding that can resist market vagaries and help those investors that are surviving a bear market.
The company will next report results on Feb. 1 before the bell. Analysts are looking for earnings of 91 cents per share on revenues of $5.8 billion. When the company last reported on Nov. 2, earnings of $1.65 beat estimates by 14 cents per share on a 2.3% rise in revenues.
Stryker (SYK)
Shares of medical device maker Stryker (NYSE:SYK) have been consolidating above their 200-day moving average all year despite the ups and downs in the broader market. Watch for a breakout of resistance near $178 as long-held support near the 50-week moving average reinvigorates the bulls.
The company will next report results on Jan. 24 after the close. Analysts are looking for earnings of $2.15 per share on revenues of $3.7 billion. When the company last reported on Oct. 25, earnings of $1.69 beat estimates by a penny on a 7.9% rise in revenues.
Dominion Energy (D)
Shares of Dominion Energy (NYSE:D) are breaking higher, rising nearly 12% off of the lows seen in early November to return to levels last seen in January. Investors have been encouraged by a recent upgrade by UBS analysts as well as the integration of Dominion Midstream assets. As a reminder, the shale oil production boom has been constrained by pipeline infrastructure — benefiting midstream companies.
The company will next report on Jan. 31 before the bell. Analysts are looking for earnings of 94 cents per share on revenues of $3.3 billion. When the company last reported on Nov. 1, earnings of $1.15 beat estimates by 2 cents per share on a 8.6% rise in revenues.
As of this writing, William Roth did not hold a position in any of the aforementioned securities.
