In this article, we discuss 5 best defensive stocks to buy now. If you want to see more best defensive stocks to buy, the risk/reward and methodology of this list, go directly to 12 Best Defensive Stocks to Buy Now.
5. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 69
Year to Date Performance as of 11/29: -10.69%
The Procter & Gamble Company (NYSE:PG) is the worst performing stock on our list of 12 Best Defensive Stocks to Buy Now given its stock decline of 10.69% year to date. Although The Procter & Gamble Company (NYSE:PG) is a leading consumer staple, its brands tend to cost more and as a result, the company’s results have not been as strong in times of high inflation. Nevertheless, The Procter & Gamble Company (NYSE:PG)’s performance is still better than the S&P 500’s decline of 17.5% year to date and the company can still do well in the long term if inflation normalizes and its brands maintain their market share.
4. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 72
Year to Date Performance as of 11/29: 5.56%
PepsiCo, Inc. (NASDAQ:PEP) is a leader in convenient foods and beverages with its portfolio that includes brands such as Pepsi-Cola, Mountain Dew and Doritos. Given that demand for PepsiCo, Inc. (NASDAQ:PEP)’s product doesn’t change that much in tougher times, the company is regarded as a defensive stock that also has growth potential in the long term. Year to date, shares of PepsiCo, Inc. (NASDAQ:PEP) have rallied 5.56% as of November 29.
3. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 85
Year to Date Performance as of 11/29: 2.65%
Johnson & Johnson (NYSE:JNJ) ranks #3 on our list of 12 Best Defensive Stocks to Buy Now given its strong healthcare conglomerate business that has increased earnings over time. Given demand for healthcare doesn’t change all that much in tough times, Johnson & Johnson (NYSE:JNJ)’s business isn’t very cyclical, which allows the company to continue to raise its annual dividend for 60 consecutive years. As a stock, Johnson & Johnson (NYSE:JNJ) has also done well with shares up 2.65% year to date despite the S&P 500 declining 17.5% in 2022.
2. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 146
Year to Date Performance as of 11/29: -7.50%
Although shares of payments giant Mastercard Incorporated (NYSE:MA) are down 7.5% year to date as of 11/29, the stock is still considered defensive by many investors given that overall consumer spending is expected to continue to increase in the future and Mastercard Incorporated (NYSE:MA) has a good chance of growing along with consumer spending if it continues to innovate.
Baron Funds commented on Mastercard Incorporated (NYSE:MA) in a Q3 2022 investor letter,
Shares of global payment network Mastercard Incorporated (NYSE:MA) fell despite reporting financial results that exceeded Street estimates. Revenue grew 21% and EPS grew 32% in the most recent reported quarter, and strong payment activity has persisted despite high inflation. Share price weakness represented a reversal of outperformance earlier this year and was likely driven by adverse foreign exchange movements and concerns about a potential weakening of consumer spending. We retain conviction due to Mastercard’s long runway for growth and significant competitive advantages.
1. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 165
Year to Date Performance as of 11/29: -5.59%
Visa Inc. (NYSE:V) ranks #1 on our list of 12 Best Defensive Stocks to Buy Now given its leading position in payments. Much like Mastercard Incorporated (NYSE:MA), Visa Inc. (NYSE:V) is considered defensive because consumer spending is expected to increase in the long term and Visa Inc. (NYSE:V)’s market share might not change all that much given its strong network effects if the company continues to innovate. Although shares are down 5.59% year to date, Visa Inc. (NYSE:V) has strong long term growth potential. 165 hedge funds in our database owned shares of Visa Inc. (NYSE:V) at the end of Q3 2022.
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