Recent volatility has many investors concerned about the current state of their investments. As interest rates rise, investors are beginning to shift toward more defensive stocks.
Defensive stocks are stocks that are considered safer. They might not offer the same opportunity for massive gains that more aggressive stocks do, but they come from sectors like consumer staples and healthcare that are expected to perform in essentially any economic conditions.
These are some of the best defensive stocks on the market today for investors looking to safeguard their portfolios from any upcoming turbulence. All of these options have a solid foundation for lasting value while still showing that they can grow and build something for the future.
1. Lockheed Martin (LMT)
- 52-week price range: $324.23 – $479.99
- Price as of Oct. 25: $460.15
- Market cap: $122.99 billion
Lockheed Martin is quite literally a defense stock, having signed contracts with the U.S. government and others around the world in space, aeronautics, rotary and mission systems and missiles and fire control.
National defense is a dependable sector that isn’t expected to see any issues anytime soon, and Lockheed Martin is at the head of the pack. Investors have little reason to doubt this or other defense stocks from stalwart government contractors of this caliber.
2. Costco (COST)
- 52-week price range: $406.51 – $612.27
- Price as of Oct. 25: $499.06
- Market cap: $223.3 billion
Costco is a major retail chain that’s beloved by anyone who buys in bulk. Selling everything from groceries to vacation packages, people will likely keep shopping there regardless of changes in the market.
Costco’s financial results for the quarter that ended on Aug. 31 reported that net sales were $70.8 billion, an increase of 15.3% over the same quarter last year. This growth is another great sign for what is already a solid defensive stock.
3. Walmart (WMT)
- 52-week price range: $117.27 – $160.77
- Price as of Oct. 25: $140.07
- Market cap: $383.82 billion
Large retail chains are typically good defensive stock picks, with Walmart being a prime example. This is a truly massive company and is, in fact, the world’s largest private employer, with over 2.3 million employees, 1.7 million of whom work in the U.S.
Both in the U.S. and around the world, people rely on Walmart every day for groceries and just about anything they could need. Even with stiff competition from online retailers, Walmart is a solid choice for a stable and reliable defensive stock.
4. FedEx (FDX)
- 52-week price range: $141.92 – $266.79
- Price as of Oct. 25: $155.80
- Market cap: $41.3 billion
FedEx is synonymous with delivery in the U.S., although it also offers a wide range of business and e-commerce services. It maintains an extensive supply chain that positions the company to thrive in any kind of economic condition.
One reason to invest in FedEx now is the recent announcement of a major deal with Microsoft. The continued collaboration between the two companies will include a variety of innovative new applications of network intelligence and logistics as a service. As a company with a solid base that continues to innovate, FedEx is a great pick.
5. McKesson (MCK)
- 52-week price range: $202.61 – $389.57
- Price as of Oct. 25: $382.43
- Market cap: $55.61 billion
Healthcare is something people need regardless of how well the stock market is doing. This makes the sector a staple of defensive stocks, and McKesson is a great example. The company provides a range of services in healthcare supply chain management, specialty care, retail pharmacy and more.
With the current price closer to the top of the 52-week price range than the bottom, McKesson is currently doing better than many of the other defensive stocks on this list. That also means you might have to wait to see significant returns, but long plays are a wise strategy when you’re riding out a period of economic uncertainty.
6. Procter & Gamble (PG)
- 52-week price range: $122.18 – $165.35
- Price as of Oct. 25: $130.86
- Market cap: $313.76 billion
Procter & Gamble offers a broad range of products, with a wide range of brands under the company, including Gillette, Olay, Oral-B, Tide, Dawn, Bounty, Febreze, Pampers, Pantene and many more. These are all consumer essentials that are resilient to economic changes, making Procter & Gamble a good choice for a defensive stock.
The most recent report from the company shows that net sales for the fiscal fourth quarter of 2022, which ended on June 30, were $19.5 billion, a 3% increase compared to last year. What’s more, the company returned almost $19 billion to shareholders during fiscal year 2022 — $8.8 billion in dividends and $10 billion in stock buybacks. With a solid foundation and ongoing development, Procter & Gamble is well worth taking a look at.
7. CVS Health (CVS)
- 52-week price range: $86.28 – $111.25
- Price as of Oct. 25: $92.22
- Market cap: $122.62 billion
CVS is a widespread pharmacy chain with over 9,900 locations in all 50 states plus Washington, D.C., and Puerto Rico. Despite competition from pharmacies in larger retail chains like Walmart, CVS has continued to grow and thrive, with the company’s resilience making it a fantastic defensive stock.
Along with its solid base as a pharmacy and retail store, CVS completed its ambitious acquisition of Aetna, an American health insurance company, in 2018. As of the company’s Aug. 3 earnings release for the second quarter of 2022, total revenues were up 11.1% year to date compared to last year. Strong results prompted CVS to increase its earnings-per-share and cash-flow forecasts for the year.
8. General Motors (GM)
- 52-week price range: $30.33 – $67.21
- Price as of Oct. 25: $37.01
- Market cap: $55.59 billion
Despite the catastrophic hit to its reputation that GM took with the 2008 U.S. auto industry bailout, the company has since gone on to great success. Today, GM is considered a reliable long-term pick with a future in electric vehicle development.
GM encompasses the brands Chevrolet, GMC, Buick and Cadillac, among others. The company is committed to developing 30 new electric vehicles across these lines by 2025. Despite past trouble, GM has a solid foundation today and has shown that it is thinking about the future as well — a great combination for any defensive stock.
Pros and Cons of Investing In Defensive Stocks
Defensive stocks can be a great choice during difficult economic times, but no investment is perfect. Consider the pros and cons of defensive stocks before you invest.
- Tend to do well when the economy is struggling
- Consist of strong companies with long track records
- Pose less risk than cyclical stocks
- Often grow slower than cyclical stocks
- Inflation can outpace returns
- Might produce lower returns than safer investments, such as bonds, when interest rates are rising
These eight defensive stock choices each have something unique to offer that could be the right choice for a more conservative portfolio. With interest rates and other concerns causing investors to become more cautious, these stocks represent the potential for further growth in troubled times.
Daria Uhlig contributed to the reporting for this article.
Data was compiled on Oct. 26, 2022, and is subject to change.