Defensive stocks are stocks of companies that deliver products and services of essential or necessary nature like healthcare, medicines, basic utilities, consumer goods, etc. The demand for such companies is the same through various business cycles, and therefore, they offer stable income and growth prospects to investors, making them ideal investment choices during market uncertainties.
Given this backdrop, it could be wise to invest in quality defensive stocks Johnson & Johnson (JNJ), Pfizer Inc. (PFE), and Genie Energy Ltd. (GNE) for stability amid market volatility.
The U.S. economy has been showing mixed growth this year with each quarter. The economy grew at a 1.3% annualized rate in the first quarter, indicating slow expansion, whereas during the second quarter, the rate rose to 3.0%, fueled by strong household income growth and consumer spending.
Last week, the Bureau of Economic Analysis (BEA) reported GDP growth of 2.8% at an annual rate in the third quarter of 2024, lower than the economists’ estimate of 3.0%. The development during the quarter was driven by increasing consumer spending, which increased by 3.7%, the highest since the first quarter of 2023.
This market volatility has caused investors to seek defensive stocks that remain stable during market downturns and offer stable income through dividends and long-term growth opportunities.
Demand for healthcare amenities remains constant, as the need for medical treatments remains the same regardless of economic conditions. Hence, the sector offers investors stability and protection during market downturns. Likewise, basic utilities such as goods and services like water, gas, and electricity cannot be avoided or subset, given their necessity for survival.
Therefore, investing in defensive stocks amidst economic uncertainties is ideal due to constant consumer demand, stable income, and portfolio protection. Given these factors, let’s delve deeper into the fundamentals of the top defensive stocks: JNJ, PFE, and GNE.
Johnson & Johnson (JNJ)
JNJ researches, develops, manufactures, and sells various products in the healthcare field internationally. The company operates in the Innovative Medicine and MedTech segments. It offers products for various therapeutic areas, like immunology, including rheumatoid arthritis, psoriatic arthritis, inflammatory bowel disease, and psoriasis.
On October 28, JNJ announced results from the Phase 3 GRAVITI study of TREMFYA® (guselkumab), the first and only IL-23 inhibitor. TREMFYA showed robust subcutaneous induction and maintenance therapy results, demonstrating significant clinical remission and endoscopic response at 48 weeks in adults with moderately to severely active CD.
Upon FDA approval, TREMFYA® could become the first IL-23 treatment to offer a subcutaneous and intravenous (IV) induction regimen for patients with Crohn's disease (CD).
On October 9, JNJ completed the acquisition of V-Wave Ltd., a privately held company focused on developing innovative treatment options for patients with heart failure. The acquisitions added V-Wave’s novel and minimally invasive Ventura® interatrial shunt to the Johnson & Johnson MedTech portfolio and will also strengthen its position in the cardiovascular disease segment.
During the nine months that ended September 30, 2024, JNJ’s reported sales increased 4% year-over-year to $66.30 billion. Its gross profit rose 4.4% year-over-year to $45.96 billion. The company’s net earnings from continuing operations of $10.64 billion and $4.83 indicate increases of 15.7% and 24.1% from the prior year’s period, respectively.
Analysts expect JNJ’s EPS for the fourth quarter (ending December 2024) to increase 0.9% year-over-year to $2.31, and its revenue is estimated to increase 5% year-over-year to $22.47 billion for the same quarter. Moreover, the company surpassed the consensus EPS estimates in each of the trailing four quarters.
JNJ’s stock has soared 9.7% over the past month and 2.5% over the past six months to close the last trading session at $160.62.
JNJ’s growth prospects are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a B grade for Stability, Quality, and Value. Within the Medical - Pharmaceuticals industry, JNJ is ranked #14 out of 160 stocks.
Click here to access additional ratings of JNJ for Growth, Sentiment, and Momentum.
Pfizer Inc. (PFE)
PFE discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. The company offers medicines and vaccines in various therapeutic areas like cardiovascular metabolic, migraine, and women's health under the Eliquis, Nurtec ODT/Vydura, Zavzpret, and Premarin family brands.
On October 22, PFE received the U.S. FDA approval for its ABRYSVO® (Respiratory Syncytial Virus Vaccine), a bivalent RSV prefusion F (RSVpreF) vaccine to prevent lower respiratory tract disease (LRTD) caused by RSV in individuals between 18 and 59 years of age. ABRYSVO offers the broadest indication of the RSV vaccine in adults.
The approval was based on data from the pivotal Phase 3 trial. ABRYSVO is the first and only respiratory syncytial virus vaccine indicated for adults younger than 50. Also, the indication has now been expanded to benefit older adults and pregnant women.
Also, in the same month, PFE received FDA approval for HYMPAVZI™ (marstacimab-hncq) for routine prophylaxis to prevent or reduce the frequency of bleeding episodes in adults and pediatric patients 12 years of age and older with hemophilia A. The approval marked a significant advancement for people living with hemophilia A or B without inhibitors for bleed prevention.
During the third quarter that ended September 29, 2024, PFE’s total revenues rose 31.2% from the prior-year quarter to $17.70 billion, of which its product revenues grew 33.1% year-over-year to $15.42 billion. The company's adjusted net income and EPS came in at $6.05 billion and $1.06 for the quarter, respectively.
The company had raised its full-year 2024 revenue guidance to a range of $61 billion to $64 billion from the prior range of $59.50 to $62.50 billion. PFE also raised its adjusted EPS guidance to a range of $2.75 to $2.95.
The consensus EPS estimate of $0.46 for the fiscal fourth quarter (ending December 2024) represents a 358% improvement year-over-year. The consensus revenue estimate of $17.36 billion for the ongoing quarter represents a 21.9% increase from last year. The company has an impressive surprise history; it surpassed the consensus EPS estimates in all of the trailing four quarters.
PFE’s stock has surged 0.7% over the past six months and 3.9% over the past nine months to close the last trading session at $27.99.
PFE's bright outlook is reflected in its POWR Ratings. It has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has an A grade for Growth. It also has a B grade for Value. PFE is ranked #37 among the 160 stocks in the Medical - Pharmaceuticals industry.
Click here to access PFE’s other ratings for Quality, Momentum, Stability, and Sentiment.
Genie Energy Ltd. (GNE)
GNE is engaged in the supply of electricity and natural gas to residential and small business customers internationally. The company operates in two segments, GRE and Genie Renewables. It develops, constructs, and operates solar energy projects for commercial and industrial customers.
On March 21, GNE’s subsidiary, Sunlight Energy Investments, a retail energy and renewable energy solutions provider, purchased a late-stage solar development project in Hamilton, Indiana, from the project developer. The Hamilton project acquisition fits perfectly with the company’s growing portfolio of solar projects, which offers long-term, stable cash flows.
GNE reported total revenue of $90.70 million for the second quarter that ended June 30, 2024, and its income from operations was $10.56 million for the same period. The company’s net income attributable to Genie common stockholders and EPS came in at $9.61 million and $0.36 for the quarter, respectively.
Shares of GNE have declined marginally over the past six months to close the last trading session at $15.67.
GNE’s POWR Ratings reflect its robust outlook. GNE has an overall B rating, equating to a Buy in our proprietary rating system.
The stock has a B grade for Quality, Sentiment, Momentum, and Value. It is ranked #2 among the 59 stocks in the Utilities - Domestic industry.
Click here to access additional GNE ratings for Stability and Growth.Top of Form
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JNJ shares were trading at $158.20 per share on Wednesday afternoon, down $0.15 (-0.09%). Year-to-date, JNJ has gained 3.30%, versus a 25.58% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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