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5 Defensive Stocks to Buy as Coronavirus Fears Escalate Again

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There are no signs of the coronavirus subsiding, with the United States now having recorded more than 5 million cases. To makes matters worse, the death toll is also rising. This has reignited fears as a vaccine to wipe out the deadly virus or a treatment is nowhere in sight.

The cases have particularly been on the rise since the economy started reopening after more than two months of lockdown. Although the government has indicated that another lockdown is quite unlikely as the economy needs to get back on its feet, it won’t come as a surprise if people once choose self-isolation. Given the circumstance, stockpiling on grocery, food, and other consumer staples and discretionary items is a high chance.

COVID-19 Cases Soar Despite Caution

As of Aug 9, the United States recorded 5.01 million coronavirus cases after 58,173 new cases were reported on Saturday. Moreover, the deadly infection took 160,000 lives until Aug 8, which is reason enough to worry. Experts say the country is likely to continue seeing new record numbers of daily cases.

Although the United States is slowly reopening its economy and even lifted the global travel alert last week in a bid to get back to normal, there has been no change in the intensity of fear in the minds of people. With no signs of a vaccine yet, fears continue to haunt in spite of strict safety guidelines like social distancing and isolation, and a more cautious approach by people in general.

Braving the Pandemic

There’s a sea change in the pre- and post-pandemic world. Work and learn from home have become the new culture, while social distancing has changed business completely. Moreover, social distancing measures have made people more self-reliant and homebound.

Although most sectors have taken a beating, a few have managed to cash in on the coronavirus crisis. One of the beneficiaries is the consumer discretionary and consumer staples sector as more people have started believing in stockpiling to avoid stepping out of their homes. Moreover, everything else can stop but essential goods need to reach people for survival.

The massive push that essential goods received during the lockdown from surging demand in consumer staples, medicines and discretionary, may be felt again with the spike in new virus cases.

Our Choices

Given the current economic condition and looming coronavirus fears, investors can pick the following six defensive stocks from utilities, healthcare and consumer staples that can return well even during phases of market volatility. Defensive stocks provide stable returns regardless of market gyrations.

Spectrum Brands Holdings Inc. (SPB - Free Report) offers a portfolio of leading brands in several product categories like residential locksets, plumbing, electric shaving and grooming products, personal care products, small household appliances, specialty pet supplies, lawn and garden, and home pest control products and repellents.

The company’s expected earnings growth rate for the current year is 25.5%. The Zacks Consensus Estimate for current-year earnings has improved 24.2% over the past 30 days. Spectrum carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ollies Bargain Outlet Holdings, Inc. (OLLI - Free Report) offers products principally under Ollie’s, Ollie’s Bargain Outlet, Good Stuff Cheap, Ollie’s Army, Real Brands Real Cheap!, Real Brands! Real Bargains!, Sarasota Breeze, Steelton Tools, American Way and Commonwealth Classics. 

The company’s expected earnings growth rate for the current year is 39.8%. The Zacks Consensus Estimate for current-year earnings has improved 18.6% over the past 30 days. Ollies Bargain Outlet has a Zacks Rank #1.

Reynolds Consumer Products Inc. (REYN - Free Report) produces and sells branded and store-brand products, which include cooking products, waste & storage products, and tableware. The company's flagship products include Reynolds Wrap aluminum foil, Hefty bags, and Hefty party cups.

The company’s expected earnings growth rate for the current year is 32.4%. The Zacks Consensus Estimate for current-year earnings has improved 2.1% over the past 30 days.  Reynolds has a Zacks Rank #2 (Buy).

Prestige Consumer Healthcare Inc. (PBH - Free Report) and its subsidiaries develop, manufacture, market, sell and distribute over-the-counter healthcare and household cleaning products in the United States, Canada, Australia and certain other international markets. 

The company’s expected earnings growth rate for the current year is 3%. The Zacks Consensus Estimate for current-year earnings has improved 2% over the past 30 days.Prestige Consumer Healthcare carries a Zacks Rank #2.

Grocery Outlet Holding Corp. (GO - Free Report) is a high-growth, extreme value retailer of quality, name-brand consumables and fresh products that are sold through a network of independently owned and operated stores.

The company’s expected earnings growth rate for the current year is 26.6%. The Zacks Consensus Estimate for current-year earnings has improved 2% over the past 60 days.Grocery Outlet Holding carries a Zacks Rank #2.

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