Should Investors Be Watching These Top Defensive Stocks In August 2021?
While investors evaluate this week’s mixed bag of economic data, defensive stocks remain viable in the stock market now. After all, companies in this sector often provide vital services. What this means is that their offerings are in demand regardless of the state of the economy. In this case, we could look at the restaurant, consumer staples, infrastructure, and health care industries to name a few. Given the current situation with the U.S. economy, some would argue that defensive stocks could be in focus.
Adding to the recent slowdown in the reopening trade, the coronavirus pandemic continues to rage on across the globe. Earlier today, the Centers for Disease Control and Prevention (CDC) provided a stern update on the delta variant of the coronavirus. According to the CDC, it is “as contagious as chickenpox” and could possibly “make older people sicker” despite being fully vaccinated. If anything, some would argue that this could continue to hamper the current economic recovery. As such, investors looking to diversify would indeed be turning towards this sector of the stock market today.
By and large, investors are spoiled for choices when it comes to defensive stocks now. For starters, health care giants like Pfizer (NYSE: PFE) continue to cater to the masses, providing vaccines and day-to-day health essentials. Another industry worth noting now would be consumer staples such as Starbucks (NASDAQ: SBUX). In particular, the company recently reported an earnings per share of $1.01 on revenue of $7.5 billion, exceeding consensus estimates on both ends. Sure, the short-term trajectory of the reopening trade seems uncertain for now. As a result, some investors would consider diversifying their portfolios with some defensive picks. Should you be one of them, check out these three making headlines this week.
Best Defensive Stocks To Watch In August
- ChargePoint Holdings Inc. (NYSE: CHPT)
- T-Mobile US Inc. (NASDAQ: TMUS)
- Restaurant Brands International Inc. (NYSE: QSR)
ChargePoint is an electric vehicle infrastructure company that is based in Campbell, California. In fact, it operates one of the largest online networks of independently owned EV charging stations. With more than a decade’s worth of experience, ChargePoint facilitates mass electric vehicle (EV) adoption with its commendable charging network in the world. It has a strong leadership position in North America and a growing presence in Europe. The company says that it has an established, capital-light business model with growth that is directly proportional to rapidly increasing EV penetration. CHPT stock currently trades at $23.65 as of Friday’s close.
Last week, the company announced that it has signed a definitive agreement to acquire has·to·be, an e-mobility provider with a leading European charging software platform. This transaction comes as Europe is among the fastest-growing markets for EV sales worldwide. ChargePoint will acquire the e-mobility company for a total purchase price of approximately €250 million ($296.38 million). The transaction is expected to close this year, subject to the satisfaction of regulatory approvals and other customary closing conditions.
In June, the company also announced a partnership with Mercedes-Benz USA for a new benchmark in EV charging in North America. Dubbed the Mercedes me Charge, it will be launched with the all-new EQS all-electric luxury sedan and will be available in all EQ future mobility products from Mercedes-EQ. The company says that drivers with a Mercedes me Charge account will have access to the largest collection of places to charge in North America, which includes nearly 60,000 public places. Given the excitement surrounding the company, will you consider adding CHPT stock to your watchlist?
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T-Mobile US Inc.
T-Mobile is a telecommunications company that delivers an advanced 4G LTE and transformative nationwide 5G network. In fact, it is one of the first and largest nationwide 5G networks in the country, reaching more cities and towns in the U.S. more than anyone else. It provides customers with unmatched value and quality, by offering the best possible service experience. TMUS stock ended Friday’s trading session at $144.02 a share and is up by over 35% in the past year.
On July 29, 2021, the company reported its second-quarter financials for 2021. T-Mobile says that it delivered industry-leading postpaid net additions and record service revenues. In detail, net customer additions for the quarter were 1.4 million to a total record-high of 104.8 million. Furthermore, total revenue for the quarter was $20 billion, an increase of 13% year-over-year. The company also reported that net income for the quarter was $978 million, 8x more than last year. It also continues to extend its 5G range, covering 305 million people and 1.7 million square miles.
The company has also improved network integration, which fuels higher merger synergies with Sprint, a company it acquired last year. Approximately 80% of Sprint customer traffic is now carried on the T-Mobile network. Given the impressive financials, the company is raising its 2021 outlook across the board for its second consecutive quarter. It expects postpaid net customer additions to be between 5 million to 5.3 million, an increase from its prior guidance of 4.4 million to 4.9 million. All things considered, will you watch TMUS stock?
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Restaurant Brands International Inc.
Another player in the defensive industry to consider now would be Restaurant Brands International Inc. (QSR). The Canadian company boasts a portfolio with several major names in the fast-food business today. These include but are not limited to the likes of Burger King, Popeyes, and Tim Hortons. According to QSR, the company facilitates approximately $31 billion in system-wide sales annually. It accomplishes this via its global network of over 27,000 restaurants that operate across more than 100 countries.
Now, QSR stock is currently trading at $68.19 a share as of Friday’s closing bell. The company’s shares are up by over 3% as of today’s opening bell on account of its latest quarter fiscal report earlier today. Diving right into it, QSR reported an earnings per share of $0.77 on revenue of $1.44 billion for the quarter. Notably, this surpasses Wall Street’s estimates of $0.61 and $1.36 billion respectively. The company also saw a significant 60% year-over-year surge in its digital sales across its three major brands.
All in all, CEO José Cil had this to say, “We are encouraged by the momentum across our business – including sales increases driven by quality menu items, rapid adoption of our digital channels by our guests, and an acceleration in new restaurant openings around the world by our franchisees who believe strongly in our brands and business model.” If all that wasn’t enough, the company is also increasing its share buyback authorization to $1 billion over the next two years. It seems that QSR is gaining momentum and is confident about its growth trajectory moving forward. Would this make QSR stock a top defensive stock pick for you?