3 Defensive Stock Gems for a Recession-Resistant Retirement


  • These three defensive stock gems stand out in the face of impending macro uncertainty. 
  • Berkshire Hathaway (BRK-B): Under Warren Buffett’s leadership, the company boasts strong finances and innovative investment approaches.
  • Northrop Grumman (NOC): The company’s engineering prowess is highlighted by key milestones in its ICBM program.
  • McDonald’s (MCD): Few companies are as defensive as McDonald’s, which provides relative value in times of economic turmoil. 
defensive stocks - 3 Defensive Stock Gems for a Recession-Resistant Retirement

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Investors often strive to retire as millionaires, but overly aggressive strategies can hinder this goal. Opting for quality stocks and maintaining a long-term approach are key. Despite media hype for hot stocks, successful investors prioritize patience over frequent trading. Riding the market’s long-term growth trajectory is more effective.

Consider three companies with enduring demand for products and services, ideal for long-term investment in building a desirable retirement fund.

Berkshire Hathaway (BRK-B)

The logo for Berkshire Hathaway displayed on a smartphone screen.
Source: sdx15 / Shutterstock.com

When talking about resilient stocks for uncertain economic times or retirement, Berkshire Hathaway (NYSE:BRK-B) comes first. The company is now within spitting distance of a $1 trillion market valuation, despite CEO Warren Buffet cautioning against growth expectations in his annual letter. Shares surged almost 2% to $429 on Monday, nearing the milestone. 

The Omaha-based company proudly showcased its excellent $167.6 billion cash reserve and $37.3 billion for operating earnings. The financials surpassed its high record in 2022 at only $30,8 billion.

Valuation-wise, Berkshire Hathaway is driving growth through its consistent increase in shareholder equity. The company’s wisdom is showcased by its capital allocations and investment strategies. This robust capital foundation supports strategic endeavors, including acquisitions and diverse investments. The company’s stock repurchase program, targeting its own shares below intrinsic value, offers downside protection and value enhancement to existing investors. I anticipate this program will continue for some time. 

Berkshire Hathaway’s blend of prudent financial stewardship, astute investing, and corporate responsibility positions it as an ethical, long-term growth prospect. Perhaps the next $1 trillion stock, Berkshire has set high standards for other corporate competitors. Therefore, it will remain one of the greatest companies ever put together.

Northrop Grumman (NOC)

United States Air Force Northrop Grumman (NOC) RQ-4B Global Hawk unmanned surveillance aircraft.
Source: viper-zero / Shutterstock.com

First established as Northrop Aircraft in 1939, the company then reincorporated into Northrop Corporation a few years later. Acquired by Grumman in 1994, the new management finally renamed it Northrop Grumman (NYSE:NOC). The major defense company offers diverse products to the U.S. Department of Defense (DOD) as per its newly restructured business units since 2020.

Northrop Grumman Corporation has seen significant progress in the Sentinel Intercontinental Ballistic Missile (ICBM) program, testing vital components at their Utah facility. Testing provided crucial data, reducing program risk and ensuring flight success. Additionally, the company collaborates closely with the Air Force during the EMD phase.

Due to institutional investors ‘ influence, earnings estimate revisions strongly correlate with a company’s stock price movement. Rising estimates lead to higher stock valuation and institutional buying, increasing prices. For Northrop Grumman, this signifies improved business prospects and potential stock appreciation.

Investors looking for a defensive stock to buy in this environment may want to consider NOC stock here. NOC will continue to provide stellar earnings, no matter what administration is in power. There’s plenty of geopolitical risk right now, and it’s hard to see the U.S. tamping down defense spending any time soon.

McDonald’s (MCD)

A McDonald's (MCD) burger box and fries rest on a flat surface.
Source: 8th.creator / Shutterstock.com

One of the most substantial standing and defensive stocks to buy is McDonald’s (NYSE:MCD), and every wise investor knows this. The company’s model balances convenience with affordability, backed by a universally beloved brand. Despite economic downturns, consumer loyalty remains strong. Additionally, innovative ventures like CosMc’s coffee concept promise growth.

While its 2.24% forward dividend yield isn’t groundbreaking, McDonald’s boasts 48 years of consecutive dividend increases, nearing dividend king status. Thus, there’s a reason to like this stock for almost every investor.

McDonald’s has come under fire for its affordability (or lack thereof) by consumers and analysts alike. However, the company’s growth profile in international markets supported by its strong brand and ability to continue innovating with its menu could provide renewed growth for this company that may seem stale to many.

Boring is good, in an environment that’s not necessarily friendly to all investor types. Despite the economy, McDonald’s relative value stands out relative to its peers and continues to create long-term value for shareholders.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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