Most analysts seem to agree that we’re not out of the woods yet in this volatile market.
In fact, UBS Group (UBS) just became the latest firm on Wall Street to lower its year-end target on the benchmark S&P 500 stock index. The Swiss bank dropped its year-end target for the S&P 500 to 5,800 from 6,400 previously. That implies growth of about 7% for the entire year.
The downgrade comes as the U.S. prepares to levy additional tariffs of up to 104% on Chinese imports, raising the chances of an all-out trade war erupting between the world’s two biggest economies. Many analysts say that the global economy could now fall into a recession this year. So, where can investors turn to play defense amid the current market turmoil? Here are three suggestions.
Top Defensive Stocks
Few stocks are as defensive as Costco Wholesale (COST). The big box retailer sells groceries and essential goods that consumers buy in good economic times and bad. The retailer also charges an annual membership fee to its customers that provides it with reliable and recurring revenue. For investors, COST stock is steady and pays a quarterly dividend of $1.17 per share, plus occasional special dividends.
Murphy Oil (MUR) is another reliable dividend payer that offers a hefty 6% yield to its shareholders. The Texas-based oil company has been a going concern since 1944 and has reliably paid a dividend since 1972. MUR stock is also trading at a cheap valuation. Currently near its 52-week low of $20.66 per share, the stock is trading at less than eight times this year’s earnings estimates.
Referred to as the Fort Knox of defensive stocks is Berkshire Hathaway (BRK.B), the holding company of legendary investor Warren Buffett. With Berkshire, investors get a company with a massive cash pile of $334 billion that also owns a host of defensive blue-chip stocks that pay strong dividends, such as Coca-Cola (KO) and American Express (AXP). You also get access to Buffett’s wisdom and market knowledge.
Is COST Stock a Buy?
The stock of Costco Wholesale has a consensus Strong Buy rating among 26 Wall Street analysts. That rating is based on 20 Buy and six Hold recommendations assigned in the past three months. The average COST price target of $1,088.72 implies 18.79% upside from current levels.
