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4 Defensive Stocks to Take Refuge in as Consumer Confidence Tanks
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Key Takeaways
Consumer confidence slipped to 93.1 in May as inflation fears and oil prices climbed.
ATO, CMS, NYT and TSN posted positive earnings estimate revisions in recent months.
Fed policymakers signaled that rate hikes may remain possible if inflation stays elevated.
Concerns about rising inflation due to the ongoing Iran war that has seen an astounding surge in global oil prices are hurting consumer confidence, which dipped further in May. Consumers are worried about the current labor market and are unclear about the economy’s health, which has turned them pessimistic.
Also, several Federal Reserve policymakers feel the need for a rate cut if inflation continues to remain elevated. We, thus, recommend buying four defensive stocks from the utilities and consumer staples sector, namely, Atmos Energy Corporation (ATO - Free Report) , CMS Energy Corporation (CMS - Free Report) , The New York Times Company (NYT - Free Report) and Tyson Foods (TSN - Free Report) .
The Conference Board on Tuesday reported that consumer confidence declined to 93.1 in May from an upwardly revised 93.8 in the prior month. Last month’s upward revision came as consumers grew slightly optimistic after a ceasefire announcement by President Donald Trump raised hopes of an end to the Iran war.
However, talks have fallen apart since then, and there are no clear signs of the war ending soon. Gasoline prices have surged nearly 40% since the beginning of the war with Iran and have played a major role in pushing inflation.
The consumer price index (CPI) increased 0.6% in April from the previous month after climbing 0.9% in March, according to data released earlier by the Bureau of Labor Statistics. Compared with a year earlier, CPI advanced 3.8% in April, marking its highest level since May 2023.
Core CPI, which excludes the more volatile food and energy categories, rose 0.4% month over month and was up 2.8% from the same period last year.
The consumer price report comes days after the University of Michigan’s consumer sentiment survey, which showed a sharp decline. The Consumer Sentiment index dropped to 44.8 in May, the lowest level since the survey started in 1952.
Consumers have been cutting down on spending to accommodate their daily needs. The Federal Reserve left interest rates unchanged in its current range of 3.5-3.75%. Market participants believe that the central bank will hold rates unchanged till 2027.
However, the minutes of the Fed’s latest FOMC meeting show that several policymakers believe that the central bank should go for a rate hike if inflation continues to remain above 2%.
4 Defensive Stocks With Upside
Atmos Energy Corporation
Atmos Energy Corporation, along with its subsidiaries, is engaged in the regulated natural gas distribution and storage business. ATO serves nearly 3.3 million customers in more than 1,400 communities across eight states from the Blue Ridge Mountains in the East to the Rocky Mountains in the West. Atmos Energy operates more than 73,000 miles of transmission and distribution lines, as well as 5,700 miles of interstate pipelines.
Atmos Energy has an expected earnings growth rate of 12.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.2% over the last 90 days. ATO has a beta of 0.65 and a current dividend yield of 2.25%.
Consolidated Edison
Consolidated Edison, Inc. is a diversified utility holding company with subsidiaries engaged in both regulated and unregulated businesses. ED’s regulated businesses operate through its subsidiaries — Consolidated Edison Company of New York, Orange and Rockland Utilities, Con Edison Clean Energy Businesses, Inc. and Con Edison Transmission, Inc.
Consolidated Edison has an expected earnings growth rate of 6.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.3% over the last 90 days. Consolidated Edison has a beta of 0.29 and a current dividend yield of 3.27%.
The New York Times Company
The New York Times Company is a leading global media organization focused on delivering high-quality journalism and information. Founded in 1851 and incorporated in 1896, NYT has evolved from a traditional newspaper publisher into a diversified digital-first media company with a strong global subscriber base and a growing portfolio of lifestyle and entertainment products.
The New York Times Companyhas an expected earnings growth rate of 17.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.9% over the last 90 days. NYT has a beta of 0.98 and a current dividend yield of 1.23%.
Tyson Foods
Tyson Foods is the biggest U.S. chicken company that produces, distributes and markets chicken, beef, pork, and prepared foods. TSN’s products are marketed and sold primarily by sales staff to grocery retailers, grocery wholesalers, meat distributors, military commissaries, industrial food processing companies, chain restaurants, international export companies and domestic distributors.
Tyson Foods’expected earnings growth rate for the current year is 0.5%. The Zacks Consensus Estimate for the current-year earnings has improved 7% over the past 90 days. Tyson Foods has a beta of 0.40 and a current dividend yield of 3.14%.
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4 Defensive Stocks to Take Refuge in as Consumer Confidence Tanks
Key Takeaways
Concerns about rising inflation due to the ongoing Iran war that has seen an astounding surge in global oil prices are hurting consumer confidence, which dipped further in May. Consumers are worried about the current labor market and are unclear about the economy’s health, which has turned them pessimistic.
Also, several Federal Reserve policymakers feel the need for a rate cut if inflation continues to remain elevated. We, thus, recommend buying four defensive stocks from the utilities and consumer staples sector, namely, Atmos Energy Corporation (ATO - Free Report) , CMS Energy Corporation (CMS - Free Report) , The New York Times Company (NYT - Free Report) and Tyson Foods (TSN - Free Report) .
These stocks have seen positive earnings estimate revisions in the past 60 days, carry a Zacks Rank #2 (Buy) at present and are set for solid returns. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Consumer Confidence Dips
The Conference Board on Tuesday reported that consumer confidence declined to 93.1 in May from an upwardly revised 93.8 in the prior month. Last month’s upward revision came as consumers grew slightly optimistic after a ceasefire announcement by President Donald Trump raised hopes of an end to the Iran war.
However, talks have fallen apart since then, and there are no clear signs of the war ending soon. Gasoline prices have surged nearly 40% since the beginning of the war with Iran and have played a major role in pushing inflation.
The consumer price index (CPI) increased 0.6% in April from the previous month after climbing 0.9% in March, according to data released earlier by the Bureau of Labor Statistics. Compared with a year earlier, CPI advanced 3.8% in April, marking its highest level since May 2023.
Core CPI, which excludes the more volatile food and energy categories, rose 0.4% month over month and was up 2.8% from the same period last year.
The consumer price report comes days after the University of Michigan’s consumer sentiment survey, which showed a sharp decline. The Consumer Sentiment index dropped to 44.8 in May, the lowest level since the survey started in 1952.
Consumers have been cutting down on spending to accommodate their daily needs. The Federal Reserve left interest rates unchanged in its current range of 3.5-3.75%. Market participants believe that the central bank will hold rates unchanged till 2027.
However, the minutes of the Fed’s latest FOMC meeting show that several policymakers believe that the central bank should go for a rate hike if inflation continues to remain above 2%.
4 Defensive Stocks With Upside
Atmos Energy Corporation
Atmos Energy Corporation, along with its subsidiaries, is engaged in the regulated natural gas distribution and storage business. ATO serves nearly 3.3 million customers in more than 1,400 communities across eight states from the Blue Ridge Mountains in the East to the Rocky Mountains in the West. Atmos Energy operates more than 73,000 miles of transmission and distribution lines, as well as 5,700 miles of interstate pipelines.
Atmos Energy has an expected earnings growth rate of 12.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.2% over the last 90 days. ATO has a beta of 0.65 and a current dividend yield of 2.25%.
Consolidated Edison
Consolidated Edison, Inc. is a diversified utility holding company with subsidiaries engaged in both regulated and unregulated businesses. ED’s regulated businesses operate through its subsidiaries — Consolidated Edison Company of New York, Orange and Rockland Utilities, Con Edison Clean Energy Businesses, Inc. and Con Edison Transmission, Inc.
Consolidated Edison has an expected earnings growth rate of 6.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.3% over the last 90 days. Consolidated Edison has a beta of 0.29 and a current dividend yield of 3.27%.
The New York Times Company
The New York Times Company is a leading global media organization focused on delivering high-quality journalism and information. Founded in 1851 and incorporated in 1896, NYT has evolved from a traditional newspaper publisher into a diversified digital-first media company with a strong global subscriber base and a growing portfolio of lifestyle and entertainment products.
The New York Times Companyhas an expected earnings growth rate of 17.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.9% over the last 90 days. NYT has a beta of 0.98 and a current dividend yield of 1.23%.
Tyson Foods
Tyson Foods is the biggest U.S. chicken company that produces, distributes and markets chicken, beef, pork, and prepared foods. TSN’s products are marketed and sold primarily by sales staff to grocery retailers, grocery wholesalers, meat distributors, military commissaries, industrial food processing companies, chain restaurants, international export companies and domestic distributors.
Tyson Foods’expected earnings growth rate for the current year is 0.5%. The Zacks Consensus Estimate for the current-year earnings has improved 7% over the past 90 days. Tyson Foods has a beta of 0.40 and a current dividend yield of 3.14%.