Recent reports on inflation have caused a stir among investors, leading to a sell-off that rattled the markets. The producer and consumer price indexes released this week revealed that annualized inflation is still above 2%, creating concerns for those hoping the Federal Reserve would lower interest rates in the near future. The uncertainty surrounding the timing of the first rate cut has led to a pullback in the market, with the S & P 500 slipping approximately 1% since the beginning of April. Despite this setback, the benchmark index has seen a 9% increase since the start of 2024.
Amidst the market turbulence, investors may find solace in defensive stocks that could provide stability during volatile times. CNBC Pro’s screener tool has identified a selection of S & P 500 stocks that meet specific criteria, such as a beta under 1, net income compound annual growth rate of 20% or more over the past three years, gross margins of 30% or more, and an upside to the average analyst’s price target of at least 10%. Among the hundreds of stocks in the index, only four stocks meet all these requirements.
In the current environment dominated by artificial intelligence and technology, ServiceNow and Roper Technologies stand out as defensive options while offering exposure to the tech sector. ServiceNow has performed on par with the Nasdaq Composite this year, showing a gain of less than 10%. With 38 out of 41 analysts rating the stock as a buy or strong buy, the consensus price target indicates a potential upside of more than 10% for the software stock. On the other hand, Roper Technologies has faced challenges this year, with shares declining slightly. However, analysts expect a turnaround, with buy ratings and price targets reflecting a rally of over 10%. Additionally, with a dividend yield of 0.6%, Roper Technologies provides an additional incentive for investors.
Beyond the tech sector, TJX, the parent company of T.J. Maxx and HomeGoods, has made it to the list of defensive stocks. Despite lagging behind the broader market this year, with a slight increase of just over 2%, analysts foresee a significant jump of more than 16% in the next year. With a dividend yield of 1.6%, TJX offers investors both growth potential and income stability.
Completing the list of defensive stocks is Coterra Energy, a name that has caught the attention of analysts. With a buy rating and a predicted upside of nearly 14%, Coterra Energy boasts a dividend yield of 2.9% and has seen shares rise by 9% this year. UBS’s Josh Silverstein, an analyst bullish on the stock, highlighted Coterra’s growing oil exposure, strong balance sheet, and robust shareholder return profile as reasons for his positive outlook.
During times of market volatility, defensive stocks provide investors with a safe haven to weather the storm. By considering companies that exhibit stability, growth potential, and strong fundamentals, investors can navigate uncertainty and protect their portfolios from market fluctuations. Whether in the tech sector or beyond, defensive stocks offer a valuable anchor in turbulent times.