In this article, we discuss the 10 defensive stocks in billionaire Ray Dalio’s latest portfolio. If you want to read our analysis of Dalio’s views on the macro-environment, go directly to 10 Defensive Stocks in Billionaire Ray Dalio’s Latest Portfolio.
5. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 61
Ray Dalio’s Bridgewater Associates’ Holdings: $683,976,000
Percentage of Ray Dalio’s Bridgewater Associates’ Portfolio: 2.75%
Stock Price as of June 24: $484.37
Costco Wholesale Corporation (NASDAQ:COST) is an Issaquah, Washington-based operator of the membership-only big-box retail stores. The company has 831 warehouses, out of which 679 are located in the US and Canada.
Despite the uncertain macroeconomic environment, Costco Wholesale Corporation (NASDAQ:COST) has been able to experience strong momentum in comparative store sales. This has aided in countering the impact on the under-pressure gross profit margin. Daniela Nedialkova at Atlantic Equities thinks that the unique business model of Costco Wholesale Corporation (NASDAQ:COST) that includes caps on margin taken on item sourcing, the power of the membership income, and the customer base comprising of higher-income segments will help Costco Wholesale Corporation (NASDAQ:COST) during inflationary periods.
Nedialkova also added that the retail sector is expected to experience volatility in the short term, and any dip in Costco Wholesale Corporation’s (NASDAQ:COST) stock price provides an attractive opportunity for investment. In the research note issued on June 9, the analyst reiterated an Overweight rating on Costco Wholesale Corporation (NASDAQ:COST) with a price target of $615.
Here’s what ClearBridge Investments said about Costco Wholesale Corporation (NASDAQ:COST) in its Q4 2021 investor letter:
“Portfolio gains were led by a diverse group of contributors. Also in consumer discretionary, Costco, which operates a chain of membership-only big-box retail stores, continues to impress as it takes to share and becomes more relevant for the consumer even as the world opens up.”
Costco Wholesale Corporation (NASDAQ:COST) was held by 61 hedge funds at the end of Q1 2022.
4. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 62
Ray Dalio’s Bridgewater Associates’ Holdings: $698,187,000
Percentage of Ray Dalio’s Bridgewater Associates’ Portfolio: 2.81%
Stock Price as of June 24: $166.13
PepsiCo, Inc. (NASDAQ:PEP) is a constituent of a portfolio of stocks to own during an economic downturn, as suggested by Wells Fargo in a research note issued on June 14. Although PepsiCo, Inc. (NASDAQ:PEP) operates in an industry that is exposed to rising commodity prices, the established brands under its umbrella provide the firm with strong pricing power. Furthermore, the company is also preparing itself for a transition towards healthier eating and beverage consumption behavior through its offerings.
ClearBridge Investments shared its insights on PepsiCo, Inc. (NASDAQ:PEP) in its Q4 2021 investor letter. Here’s what the firm said:
“The pandemic created opportunities for us to be more aggressive in a variety of areas of the market. We were opportunistic throughout the year. After a strong year for equities, we sought to bolster more defensive areas of the portfolio and added to PepsiCo, increasing our exposure to a high-quality and stable name.”
PepsiCo, Inc. (NASDAQ:PEP) stock is a great option for investors looking for defensive stocks with strong business fundamentals and a stellar balance sheet. Overall, 62 hedge funds held a stake in PepsiCo, Inc. (NASDAQ:PEP) at the end of Q1 2022.
3. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 64
Ray Dalio’s Bridgewater Associates’ Holdings: $740,145,000
Percentage of Ray Dalio’s Bridgewater Associates’ Portfolio: 2.98%
Stock Price as of June 24: $63.04
The Coca-Cola Company (NYSE:KO) is an Atlanta, Georgia-based beverage company.
In a note issued to investors on June 21, strategist Mike Wilson at Morgan Stanley pinpointed Coca-Cola as one of the companies with its earnings relatively insulated from an economic downturn. The Coca-Cola Company (NYSE:KO) stock offers a 29% upside from the current levels. The company also has the distinction of having Warren Buffett’s Berkshire Hathaway Inc (NYSE:BRK-B) as the biggest shareholder, with a holding of $24.8 billion. Coca-Cola is the fifth largest holding in the portfolio of Oracle of Omaha.
With a dividend yield of more than 2.7%, The Coca-Cola Company (NYSE:KO) stock is also a member of the Dividend Aristocrat and Dividend King list for increasing its annual dividend for the past 60 consecutive years.
ClearBridge Investments discussed its outlook on The Coca-Cola Company (NYSE:KO) in its Q4 2021 investor letter. Here’s what the firm said:
“Over the last year, we have repositioned our portfolio to navigate the course we see ahead. We added to more defensive areas of the portfolio like consumer staples (Coca-Cola). While the next month or two will likely prove choppy on account of the Omicron variant, we believe that Omicron, like Delta, represents a speed bump on the way to recovery rather than a true change in course. We see strong economic momentum continuing in 2022 and we expect interest rates to rise. After a decade of remarkably low rates, we would not be surprised if this change in direction is accompanied by some fits and starts in the markets. With our emphasis on pricing power, purposeful sector exposure, valuation discipline, and a strong dividend profile, we believe we are well-positioned for the year ahead.”
2. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 83
Ray Dalio’s Bridgewater Associates’ Holdings: $770,065,000
Percentage of Ray Dalio’s Bridgewater Associates’ Portfolio: 3.1%
Stock Price as of June 24: $182.29
Johnson & Johnson (NYSE:JNJ) is a New Brunswick, New Jersey-based developer of consumer goods, pharmaceuticals, and medical devices. The company has an AAA credit rating. This rating is achieved by a few countries in the world and a select group of corporations. Between 2011 and 2013, Johnson & Johnson (NYSE:JNJ) stock had a better credit rating than the US government.
Johnson & Johnson (NYSE:JNJ) has become the second-biggest spender on research and development (R&D) among pharma giants. Furthermore, Johnson & Johnson (NYSE:JNJ) is planning to increase its focus on the pharmaceutical business by spinning off the consumer healthcare segment as a separate entity. The segment was the smallest contributor to the bottom line, with a profit margin that was half of the pharmaceutical division.
The firm saw its revenue increase by 5% YoY to $23.4 billion during the first quarter of the year. Furthermore, Johnson & Johnson (NYSE:JNJ) has been increasing its dividend for the last 60 years. The stock offers a dividend yield of 2.52% as of June 26. Ray Dalio increased his investment in Johnson & Johnson (NYSE:JNJ) from 3.1 million shares to over 4.35 million shares during Q1 2022.
Johnson & Johnson (NYSE:JNJ) was mentioned in the Q2 2021 investor letter of Distillate Capital. Here’s what the firm said:
“The largest additions in the rebalance, Johnson & Johnson was around 50 and 40 basis points incrementally. J&J underperformed in the quarter while its normalized free cash flows held steady and so its position size was topped off to match the stable cash flows.”
Of the 912 hedge funds in Insider Monkey’s database, 83 funds held a stake in Johnson & Johnson (NYSE:JNJ) as of Q1 2022.
1. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 72
Ray Dalio’s Bridgewater Associates’ Holdings: $1,042,648,000
Percentage of Ray Dalio’s Bridgewater Associates’ Portfolio: 4.22%
Stock Price as of June 24: $144.35
The Procter & Gamble Company (NYSE:PG) is a Cincinnati, Ohio-based consumer goods company.
The Procter & Gamble Company (NYSE:PG) experienced a 10% increase in sales. The Procter & Gamble Company (NYSE:PG) acts as a defensive stock because the products offered by the company, such as diapers and detergent, are necessary consumer staples with relatively inelastic demand. The Procter & Gamble Company (NYSE:PG) is also a dividend-paying stock with a forward yield of 2.76% as of June 24.
The Procter & Gamble Company’s (NYSE:PG) earnings may come under pressure due to currency headwinds as the US dollar gains strength against other global currencies following the expected interest rate hikes. However, the company generates nearly half of its earnings from the US, which acts in its favor. Moreover, The Procter & Gamble Company (NYSE:PG) has no exposure to food, which has come under notable pressure since the start of the conflict between Russia and Ukraine earlier this year.
The Procter & Gamble Company (NYSE:PG) was held by 72 hedge funds at the end of Q1 2022.
You can also take a peek at the 10 Stocks to Buy According to BlueSpruce Investments and 10 Best Stocks To Buy In 2022 According To Billionaire Mario Gabelli.
