The defensive sector is a group of industries and companies that are known to be less sensitive to economic downturns and market volatility. These industries and companies provide essential goods and services that are in constant demand. This comes regardless of the state of the economy. Examples of defensive industries include healthcare, consumer staples, and utilities.
Investing in defensive stocks can provide investors with a measure of stability and a hedge against market volatility. These stocks tend to perform relatively well during economic downturns. This is because consumers continue to demand the essential goods and services they provide. Furthermore, defensive stocks often pay dividends, providing a steady source of income for investors.
However, it is important to keep in mind that no investment is completely immune to market volatility. As well as the performance of individual defensive stocks can be impacted by a variety of factors. These include changes in regulation, technological advancements, and competition. Retail investors should thoroughly research and understand the risks involved before making any investment decisions. With that said, let’s dive into two defensive stocks to keep an eye on in the stock market now.
Defensive Stocks To Buy [Or Avoid] Today
- Costco Wholesale Corporation (NASDAQ: COST)
- Johnson & Johnson (NYSE: JNJ)
Costco Wholesale Corporation (COST Stock)
Leading off, Costco Wholesale Corporation (COST) is a large retailer of consumer goods. The company offers a wide range of products, including groceries, electronics, and household goods. It is a defensive stock due to the constant demand for its products, regardless of the state of the economy.
Earlier this month, Costco Wholesale Corporation reported its January 2023 sales results. In detail, the company reported a 6.9% increase from the previous year with a total of $16.84 billion in net sales for the retail month. The Lunar New Year/Chinese New Year, which took place 10 days earlier this year, slightly impacted the company’s Other International and Total Company sales by 2% and 0.25%, respectively. Overall, the company saw a 7.5% increase in net sales for the 22 weeks ended January 29, 2023. Specifically, the company reported $99.00 billion compared to $92.10 billion the previous year.
Since the start of 2023, shares of COST stock have increased by 10.97% year-to-date. Meanwhile, during Monday morning’s trading session, Costco stock is up 0.66% off the open trading at $503.27 a share.
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Johnson & Johnson (JNJ Stock)
Next, Johnson & Johnson (JNJ) is a multinational healthcare company. In brief, JNJ develops, manufactures, and sells a broad range of medical devices, pharmaceuticals, and consumer healthcare products. As a healthcare company, it is considered a defensive stock due to the constant demand for its products and services. Especially during times of economic uncertainty.
Just last month, the company reported its 4th quarter and full-year 2022 financial and operating results. Diving in, JNJ Johnson & Johnson (JNJ) reported fourth-quarter 2022 earnings of $2.35 per share and $23.7 billion in revenue. This exceeds analysts’ consensus estimates of $2.22 earnings per share and $23.9 billion in revenue. Despite the positive earnings report, the company’s revenue fell 4.4% compared to the previous year.
Year-to-date so far, shares of Johnson and Johnson stock have fallen by 8.86%. While, during Monday morning’s trading action, JNJ stock is up modestly off the open by 0.12% trading at $162.34 per share.
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