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4 Defensive Stocks to Take Refuge in as Consumer Sentiment Plummets
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Key Takeaways
ADM, COCO, AMGN and CNC are highlighted as defensive stocks amid falling consumer sentiment.
ADM's earnings growth is expected at 52.2%, with estimates up 8.5% over 60 days.
CNC's earnings growth tops 100%, while current-year estimates have risen 40.9% in 60 days.
Inflation surged again in August, making it almost inevitable for the Federal Reserve to hike interest rates next week in its policy meeting. Higher prices of goods and services and renewed tensions in the Middle East have led consumers to worry that inflation could rise over the next year.
Surging oil prices owing to the war between the United States and Iran have been a major factor behind high inflation. Markets have remained volatile for the past three months, and the overall situation has been denting consumer sentiment.
Given this situation, it would be wise to invest in defensive stocks from the consumer staples and healthcare sectors. Four such stocks are: Archer-Daniels-Midland Company (ADM - Free Report) , The Vita Coco Company, Inc. (COCO - Free Report) , Amgen Inc. (AMGN - Free Report) , and Centene Corporation (CNC - Free Report) .
Consumer Sentiment Hits a Low
The University of Michigan reported that its Consumer Sentiment Index fell to 47.8 in September from 51.7 in the previous month. This was also sharply lower than the economists’ forecast of 51.
Persistent high inflation has been weighing on consumers’ sentiment. The survey’s measure of consumers’ expectations for inflation over the next 12 months rose to 4.6% in September from 4% in the month earlier. The long-term, or consumers’ five-year, inflation expectation rose to 3.4% in September from 3.3% in August. This is also sharply higher than the 2024 range of 3.8% to 3.2%.
Most importantly, the short-term inflation expectation was 3.4% in February before the U.S.-Iran war broke out. Oil prices have risen over the past several months, easing slightly in June and July.
However, as tensions have escalated again in the Middle East, energy costs have resumed their upward trend. Higher oil prices have impacted almost every sector, pushing prices of goods and services higher, resulting once again in rising inflation.
The consumer price index (CPI) rose 0.4% month over month in August, the Bureau of Labor Statistics said last week. The annual CPI rate came in at 3.4%. Core CPI, which strips out the volatile food and energy, climbed 0.3% month over month in August, taking the annual rate to 2.4%.
The Federal Reserve, which held interest rates steady this year, has no options left but to hike interest rates at its policy meeting next week. This could keep markets volatile for a longer period as higher borrowing costs would make things more difficult for consumers.
4 Defensive Stocks With Upside
Archer-Daniels-Midland Company
Archer-Daniels-Midland Company is one of the leading producers of food and beverage ingredients as well as goods made from various agricultural products. ADM processes oilseeds, corn, wheat, cocoa and other feedstuffs. It also engages in the manufacturing, sale, and distribution of products like natural flavor ingredients, flavor systems, natural colors, proteins, emulsifiers, soluble fiber, polyols, hydrocolloids, natural health and nutrition products, as well as other specialty food and feed ingredients.
Archer-Daniels-Midland Company has an expected earnings growth rate of 52.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 8.5% over the last 60 days. ADM currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Vita Coco Company
The Vita Coco Company, Inc. provides a beverage platform. COCO’s brands include coconut water, Vita Coco; clean energy drink Runa; sustainable enhanced water, Ever & Ever, and protein-infused water, PWR LIFT.
The Vita Coco Company’s expected earnings growth rate for the current year is 63.9%. The Zacks Consensus Estimate for current-year earnings has improved 10.2% over the past 60 days. COCO currently sports a Zacks Rank #1.
Amgen
Amgen Inc. is one of the biggest biotech companies in the world, with a strong presence in the oncology, general medicine, inflammation and rare diseases markets. AMGN used advances in cellular and molecular biology to develop two of the biotech industry’s earliest and most successful drugs, Epogen (anemia) and Neupogen (white blood cell stimulant). Amgen successfully launched two next-generation products — Aranesp and Neulasta.
Amgen has an expected earnings growth rate of 5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3% over the past 60 days. AMGN currently has a Zacks Rank #2 (Buy).
Centene Corporation
Centene Corporation is a well-diversified healthcare company that primarily provides a set of services to government-sponsored healthcare programs, while serving underinsured and uninsured individuals through member-focused services. CNC is also engaged in providing education and outreach programs to inform and assist members in accessing quality, appropriate healthcare services. Centene operates a capitated managed-care model. Under this model, it receives a fixed payment per member per month from government programs such as Medicaid, Medicare and ACA Marketplace plans.
Centene Corporation has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 40.9% over the past 60 days. CNC currently sports a Zacks Rank #1.
View the Zacks #1 Rank List
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4 Defensive Stocks to Take Refuge in as Consumer Sentiment Plummets
Key Takeaways
Inflation surged again in August, making it almost inevitable for the Federal Reserve to hike interest rates next week in its policy meeting. Higher prices of goods and services and renewed tensions in the Middle East have led consumers to worry that inflation could rise over the next year.
Surging oil prices owing to the war between the United States and Iran have been a major factor behind high inflation. Markets have remained volatile for the past three months, and the overall situation has been denting consumer sentiment.
Given this situation, it would be wise to invest in defensive stocks from the consumer staples and healthcare sectors. Four such stocks are: Archer-Daniels-Midland Company (ADM - Free Report) , The Vita Coco Company, Inc. (COCO - Free Report) , Amgen Inc. (AMGN - Free Report) , and Centene Corporation (CNC - Free Report) .
Consumer Sentiment Hits a Low
The University of Michigan reported that its Consumer Sentiment Index fell to 47.8 in September from 51.7 in the previous month. This was also sharply lower than the economists’ forecast of 51.
Persistent high inflation has been weighing on consumers’ sentiment. The survey’s measure of consumers’ expectations for inflation over the next 12 months rose to 4.6% in September from 4% in the month earlier. The long-term, or consumers’ five-year, inflation expectation rose to 3.4% in September from 3.3% in August. This is also sharply higher than the 2024 range of 3.8% to 3.2%.
Most importantly, the short-term inflation expectation was 3.4% in February before the U.S.-Iran war broke out. Oil prices have risen over the past several months, easing slightly in June and July.
However, as tensions have escalated again in the Middle East, energy costs have resumed their upward trend. Higher oil prices have impacted almost every sector, pushing prices of goods and services higher, resulting once again in rising inflation.
The consumer price index (CPI) rose 0.4% month over month in August, the Bureau of Labor Statistics said last week. The annual CPI rate came in at 3.4%. Core CPI, which strips out the volatile food and energy, climbed 0.3% month over month in August, taking the annual rate to 2.4%.
The Federal Reserve, which held interest rates steady this year, has no options left but to hike interest rates at its policy meeting next week. This could keep markets volatile for a longer period as higher borrowing costs would make things more difficult for consumers.
4 Defensive Stocks With Upside
Archer-Daniels-Midland Company
Archer-Daniels-Midland Company is one of the leading producers of food and beverage ingredients as well as goods made from various agricultural products. ADM processes oilseeds, corn, wheat, cocoa and other feedstuffs. It also engages in the manufacturing, sale, and distribution of products like natural flavor ingredients, flavor systems, natural colors, proteins, emulsifiers, soluble fiber, polyols, hydrocolloids, natural health and nutrition products, as well as other specialty food and feed ingredients.
Archer-Daniels-Midland Company has an expected earnings growth rate of 52.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 8.5% over the last 60 days. ADM currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Vita Coco Company
The Vita Coco Company, Inc. provides a beverage platform. COCO’s brands include coconut water, Vita Coco; clean energy drink Runa; sustainable enhanced water, Ever & Ever, and protein-infused water, PWR LIFT.
The Vita Coco Company’s expected earnings growth rate for the current year is 63.9%. The Zacks Consensus Estimate for current-year earnings has improved 10.2% over the past 60 days. COCO currently sports a Zacks Rank #1.
Amgen
Amgen Inc. is one of the biggest biotech companies in the world, with a strong presence in the oncology, general medicine, inflammation and rare diseases markets. AMGN used advances in cellular and molecular biology to develop two of the biotech industry’s earliest and most successful drugs, Epogen (anemia) and Neupogen (white blood cell stimulant). Amgen successfully launched two next-generation products — Aranesp and Neulasta.
Amgen has an expected earnings growth rate of 5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3% over the past 60 days. AMGN currently has a Zacks Rank #2 (Buy).
Centene Corporation
Centene Corporation is a well-diversified healthcare company that primarily provides a set of services to government-sponsored healthcare programs, while serving underinsured and uninsured individuals through member-focused services. CNC is also engaged in providing education and outreach programs to inform and assist members in accessing quality, appropriate healthcare services. Centene operates a capitated managed-care model. Under this model, it receives a fixed payment per member per month from government programs such as Medicaid, Medicare and ACA Marketplace plans.
Centene Corporation has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 40.9% over the past 60 days. CNC currently sports a Zacks Rank #1.