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4 Defensive Stocks to Take Refuge in as Tech Sell-off Continues
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Key Takeaways
Tech sell-off has driven investors toward defensive sectors like utilities, financials and healthcare.
COLL, IRWD, AMTB and DUK are highlighted for expected earnings growth and improved estimates.
Nasdaq fell after a strong quarter as AI valuation and spending concerns fueled the recent rotation.
Tech stocks have been suffering over the past few weeks, as investors continue to rotate out of the artificial intelligence (AI)-focused tech and semiconductor stocks due to growing concerns over their sustainability. Despite a solid first half, the Nasdaq ended June sharply lower, as panic among investors triggered a massive tech sell-off.
Investors, over the past few weeks, have been shifting to other defensive areas of the market. Given the ongoing turmoil, it would be a safe option to invest in defensive picks from the utility, financials and healthcare sectors, such as Collegium Pharmaceutical, Inc. (COLL - Free Report) , Ironwood Pharmaceuticals, Inc. (IRWD - Free Report) , Amerant Bancorp Inc. (AMTB - Free Report) and Duke Energy Corporation (DUK - Free Report) , which have solid growth potential for this year.
Tech Slide Continues
Tech stocks have continued to suffer since mid-June, with the Nasdaq giving up 1.2% on Tuesday to end at 25,818.69 points. The ongoing sell-off comes amid growing concerns over the sustainability of AI-related stocks.
Although tech stocks have largely been responsible for the broader market rally since 2023, growing concerns over sky-high market valuations, higher capital spending on data centers, and uncertain near-term revenue prospects have led to a tech sell-off lately. Investors are increasingly questioning whether corporate adoption of AI will be solid enough to justify the massive investments being made in AI infrastructure.
The Nasdaq gained 21.4% in the second quarter, recording the best quarterly gains since 2020 and outperforming both the Dow and S&P 500. However, the sell-off saw the tech-heavy index end the month nearly 2.8% lower. The Nasdaq is roughly 0.8% down month to date.
June alone saw 2.3 trillion erased in market cap for the “Magnificent Seven” tech companies, all of which have been investing heavily in AI.
The tech sell-off comes as investors take refuge in other defensive areas of the market like utilities, financials and healthcare. The Utilities Select Sector SPDR (XLU) and Financials Sector SPDR (XLF) have gained 6.1% and 2,5%, respectively, year to date. The Health Care Sector SPDR (XLV) is up 4.6% year to date.
4 Defensive Stocks With Upside
Collegium Pharmaceutical
Collegium Pharmaceutical, Inc. is a specialty pharmaceutical company. COLL develops and commercializes prescription and over-the-counter pharmaceuticals for the treatment of central nervous system, respiratory and skin-related disorders.
Collegium Pharmaceutical has an expected earnings growth rate of 1.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.4% over the last 60 days. COLL currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ironwood Pharmaceuticals
Ironwood Pharmaceuticals, Inc. is focused on the development and commercialization of treatments primarily addressing gastrointestinal diseases.
Ironwood Pharmaceuticals has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 18.2% over the last 60 days. Currently, IRWD sports a Zacks Rank #1.
Amerant Bancorp
Amerant Bancorp Inc. is a bank holding company. AMTB operates through its subsidiaries, Amerant Bank, N.A., Amerant Investments, Inc. and Amerant Trust, N.A. The company provides deposit, credit and wealth management services to individuals and businesses primarily in the United States, as well as select international clients.
Amerant Bancorp has an expected earnings growth rate of 3.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the last 60 days. AMTB sports a Zacks Rank #1 at present.
Duke Energy Corporation
Duke Energy Corporation is a diversified energy company with a broad portfolio of domestic and international, natural gas and electric and regulated and unregulated businesses that supply, deliver and process energy in North America and selected international markets. DUK primarily operates through three business segments — Electric Utilities and Infrastructure, Gas Utilities and Infrastructure, and Commercial Renewables.
Duke Energy Corporation has an expected earnings growth rate of 6.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the past 60 days. Currently, DUK has a Zacks Rank #2.
View the Zacks #1 Rank List
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4 Defensive Stocks to Take Refuge in as Tech Sell-off Continues
Key Takeaways
Tech stocks have been suffering over the past few weeks, as investors continue to rotate out of the artificial intelligence (AI)-focused tech and semiconductor stocks due to growing concerns over their sustainability. Despite a solid first half, the Nasdaq ended June sharply lower, as panic among investors triggered a massive tech sell-off.
Investors, over the past few weeks, have been shifting to other defensive areas of the market. Given the ongoing turmoil, it would be a safe option to invest in defensive picks from the utility, financials and healthcare sectors, such as Collegium Pharmaceutical, Inc. (COLL - Free Report) , Ironwood Pharmaceuticals, Inc. (IRWD - Free Report) , Amerant Bancorp Inc. (AMTB - Free Report) and Duke Energy Corporation (DUK - Free Report) , which have solid growth potential for this year.
Tech Slide Continues
Tech stocks have continued to suffer since mid-June, with the Nasdaq giving up 1.2% on Tuesday to end at 25,818.69 points. The ongoing sell-off comes amid growing concerns over the sustainability of AI-related stocks.
Although tech stocks have largely been responsible for the broader market rally since 2023, growing concerns over sky-high market valuations, higher capital spending on data centers, and uncertain near-term revenue prospects have led to a tech sell-off lately. Investors are increasingly questioning whether corporate adoption of AI will be solid enough to justify the massive investments being made in AI infrastructure.
The Nasdaq gained 21.4% in the second quarter, recording the best quarterly gains since 2020 and outperforming both the Dow and S&P 500. However, the sell-off saw the tech-heavy index end the month nearly 2.8% lower. The Nasdaq is roughly 0.8% down month to date.
June alone saw 2.3 trillion erased in market cap for the “Magnificent Seven” tech companies, all of which have been investing heavily in AI.
The tech sell-off comes as investors take refuge in other defensive areas of the market like utilities, financials and healthcare. The Utilities Select Sector SPDR (XLU) and Financials Sector SPDR (XLF) have gained 6.1% and 2,5%, respectively, year to date. The Health Care Sector SPDR (XLV) is up 4.6% year to date.
4 Defensive Stocks With Upside
Collegium Pharmaceutical
Collegium Pharmaceutical, Inc. is a specialty pharmaceutical company. COLL develops and commercializes prescription and over-the-counter pharmaceuticals for the treatment of central nervous system, respiratory and skin-related disorders.
Collegium Pharmaceutical has an expected earnings growth rate of 1.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.4% over the last 60 days. COLL currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ironwood Pharmaceuticals
Ironwood Pharmaceuticals, Inc. is focused on the development and commercialization of treatments primarily addressing gastrointestinal diseases.
Ironwood Pharmaceuticals has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 18.2% over the last 60 days. Currently, IRWD sports a Zacks Rank #1.
Amerant Bancorp
Amerant Bancorp Inc. is a bank holding company. AMTB operates through its subsidiaries, Amerant Bank, N.A., Amerant Investments, Inc. and Amerant Trust, N.A. The company provides deposit, credit and wealth management services to individuals and businesses primarily in the United States, as well as select international clients.
Amerant Bancorp has an expected earnings growth rate of 3.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the last 60 days. AMTB sports a Zacks Rank #1 at present.
Duke Energy Corporation
Duke Energy Corporation is a diversified energy company with a broad portfolio of domestic and international, natural gas and electric and regulated and unregulated businesses that supply, deliver and process energy in North America and selected international markets. DUK primarily operates through three business segments — Electric Utilities and Infrastructure, Gas Utilities and Infrastructure, and Commercial Renewables.
Duke Energy Corporation has an expected earnings growth rate of 6.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the past 60 days. Currently, DUK has a Zacks Rank #2.