As investors look ahead to 2026, caution is gradually replacing confidence. After an extended period of market strength, supported by innovation-led growth and steady consumer activity, expectations are becoming more tempered. 

Slower economic momentum, uneven demand patterns and rising uncertainty around corporate earnings are prompting many investors to reassess risk. While a recession is not a certainty, the backdrop suggests that the coming year could be more volatile than recent ones.

The U.S. economy today reflects a mixed picture. Consumer activity remains intact, but spending behavior has shifted toward necessities rather than discretionary items. Businesses continue to operate, though many are navigating tighter margins and a more selective demand environment. This combination of resilience and restraint creates an economy that is functional but vulnerable — one that could feel pressure if growth slows further or confidence weakens.

These conditions help explain why 2026 could feel stormy. Markets tend to struggle when growth becomes less predictable and earnings visibility narrows. Investors often respond by rotating away from higher-risk areas and favoring companies with steady operations, durable demand and consistent cash generation. In such phases, stability becomes more valuable than speed.

Why Defensive Stocks Offer Stability

Defensive stocks typically perform better during uncertain periods because they serve everyday needs. Companies in sectors such as healthcare, utilities and consumer staples sell products and services that people rely on regardless of economic conditions. This demand stability allows them to generate more predictable revenues and smoother earnings compared with cyclical businesses.

For investors focused on downside protection, defensive stocks can help reduce portfolio volatility while still offering long-term participation in the market. Considering all aspects, we have picked three stocks, which are favorably ranked and fit well within this framework.

TPB: Defensive Consumer Demand With Portfolio Evolution

Turning Point Brands, Inc. (TPB Quick QuoteTPB - Free Report) offers a unique blend of stability and growth, with its share up 40% over the past year. This Zacks Rank #1 (Strong Buy) company’s exposure to consumer categories that tend to show stable usage patterns makes it a safe bet. Products tied to habitual consumption typically experience less demand disruption during economic slowdowns, helping support consistent revenue generation. You can see the complete list of today’s Zacks #1 Rank stocks here.

TPB has been focused on maintaining the strength of its established brands while actively reshaping the portfolio to align with evolving consumer preferences. This includes expanding modern oral nicotine offerings and adjacent product categories, improving distribution reach and refining brand positioning. These initiatives allow Turning Point Brands to defend its core cash-generating businesses while selectively investing in growth areas. 

The Zacks Consensus Estimate for TPB’s current and next fiscal-year EPS suggests growth of 50.6% and 7.1%, respectively. Turning Point Brands has a trailing four-quarter earnings surprise of 17%, on average.

JNJ: Healthcare Stability With Innovation Depth

Healthcare demand remains steady across economic cycles, and Johnson & Johnson (JNJ Quick QuoteJNJ - Free Report) benefits from its broad exposure to pharmaceuticals and medical technologies. The company’s diversified business model supports consistent performance, making it a common anchor in defensive portfolios. Demand for prescription medicines, medical technologies and treatment solutions is largely non-discretionary, providing resilience when consumer spending tightens elsewhere.

Beyond stability, the company continues to reinforce its foundation through disciplined innovation. Management has emphasized advancing its pharmaceutical pipeline across multiple therapeutic areas while strengthening its medical technology portfolio with next-generation devices and digital capabilities. This balanced focus allows Johnson & Johnson to protect cash flows in weaker environments while still investing in long-term growth opportunities.

The Zacks Consensus Estimate for JNJ’s current and next fiscal-year earnings per share (EPS) suggests growth of 8.9% and nearly 5.7%, respectively. Johnson & Johnson has a trailing four-quarter earnings surprise of 3.8%, on average. Shares of this Zacks Rank #2 (Buy) company have rallied 36.2% in the past year.

NEE: Essential Utility Demand With Structural Growth

NextEra Energy, Inc. (NEE Quick QuoteNEE - Free Report) , which has risen 12.1% in the past year, offers defensive characteristics rooted in its role as a provider of essential electricity services. Power demand remains relatively steady across economic cycles, supporting predictable operations and earnings visibility. The Zacks Rank #2 company’s regulated utility business adds another layer of stability, reinforcing its ability to perform during periods of uncertainty.

NextEra Energy is likely to benefit from strong long-term demand for energy infrastructure, driven by population growth, electrification trends and rising power needs from data-intensive industries. The company’s leadership in renewable energy development, storage solutions and grid modernization allows it to pair defensive utility fundamentals with participation in long-duration growth themes. This combination of consistency and strategic expansion makes it particularly attractive in a volatile macro environment.

The Zacks Consensus Estimate for NEE’s current and next fiscal-year EPS suggests growth of 7.6% and 7.8%, respectively. NextEra Energy has a trailing four-quarter earnings surprise of 4.4%, on average.

Bottom Line

As 2026 approaches with greater uncertainty, investors may favor companies that combine steady demand, operational discipline and strategic clarity. Turning Point Brands, Johnson & Johnson and NextEra Energy each fit that profile in different ways, offering stability through essential products and services while continuing to invest in growth initiatives.