3 Top Defensive Stocks To Add To Your Radar Before September 2021
With the broader stock market seeing some major volatility over the past week, I could see investors eyeing defensive stocks now. This would make sense given two key factors at play currently. For starters, with Delta variant coronavirus cases on the rise, investors are understandably spooked. So much so that several key names in the reopening trade continue to lose steam in the stock market today. We can see this in the likes of Expedia Group (NASDAQ: EXPE) and Airbnb (NASDAQ: ABNB).
Additionally, investors also seem to be wary about the Federal Reserve’s current talks about tapering. This could especially be the case this week as Fed officials meet for their annual symposium virtually. Recall that last week’s meeting minutes release caused a strong reaction from investors. Now, given all of this, some would argue that defensive stocks could be a viable play in the stock market.
After all, this sector of the stock market mainly consists of companies whose offerings see continual demand. What this means is that their core businesses are more or less stable regardless of the current business cycles. For instance, this would include utility operators like Sempra Energy (NYSE: SRE) and American Water Works (NYSE: AWK). Another example would be consumer staples stocks like Target (NYSE: TGT). With these companies’ wares and services remaining relevant in good times and bad, I can understand the current appeal. On that note, here are three top defensive stocks to know in the stock market now.
Best Defensive Stocks To Buy [Or Sell] This Week
- FedEx Corporation (NYSE: FDX)
- UnitedHealth Group Inc. (NYSE: UNH)
- Dollar Tree Company (NASDAQ: DLTR)
FedEx Corporation
To begin with, we will be taking a look at the FedEx Corporation. In brief, it is one of, if not the most prominent player in the logistics industry today. Through its vast portfolio, the company connects consumers and businesses across the globe. It accomplishes this via a massive delivery network spanning across over 220 countries and territories. Given the scale and presence of FedEx, investors could be eyeing FDX stock now as a viable defensive stock. With gains of over 140% since its pandemic-era low, could it still have room to grow this year?
Well, for one thing, the company continues to bolster its already massive operations. Earlier this month, news broke of FedEx employing robotic solutions in its facility at Queens, New York. The company is currently using an artificial intelligence (AI)-enabled Robotic Product Sortation and Identification (RPSi) system. Courtesy of AI firm Berkshire Grey (NASDAQ: BGRY), the RPSi can autonomously process, identify, sort, collect and containerize individual packages. This ranges from individual polybags and tubes to padded mailers among other small packages.
Overall, managing director Ted Dengel believes that the tech brings “significant benefits” to FedEx’s operations. According to Dengel, this includes increased safety and productivity, enhancing customer services, and greater system flexibility. Not to mention, the RPSi will reportedly learn over time, allowing for greater efficiency over time. As FedEx is bringing next-gen innovations to further refine its work, could FDX stock be a top buy for you?
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UntiedHealth Group Inc.
Following that, we will be taking a look at UnitedHealth Group (UNH). The Minnesota-based multinational company primarily works in the managed health care and insurance industry. As you can imagine, UNH offers a broad spectrum of healthcare products and services. The company can do this via its two flagship platforms. Firstly, the UnitedHealthcare platform provides health care coverage and benefits services. Secondly, the Optum platform provides information and tech-enabled health services.
Given the relevance of UNH’s offerings amidst the current pandemic, UNH stock could be another defensive stock to consider. Understandably, should coronavirus fears continue to grow among the general public, consumers would be prioritizing their overall health more. Likewise, it seems that investors are keen on UNH stock as well. This is evident as the company’s shares are sitting on year-to-date gains of over 22% and trading towards newer heights. The real question now is, would it still be worth jumping on?
If anything, we could take a look at the company’s financials to get a better understanding of this. Last month, UNH reported a total revenue of $71.3 billion in its second-quarter fiscal. This marks a sizable 15% year-over-year increase. On top of that, the company also ended the quarter with a cool $19.83 billion in cash on hand. All in all, CEO Andrew Witty cites this solid performance as a supporting factor for UNH’s confidence regarding meeting its long-term goals. Arguably, should things go as planned, we could see UNH stock continue to gain. Would you say the same?
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Dollar Tree Inc.
Another name to consider in the defensive stock trade now would be Dollar Tree. Sure, most would not immediately consider Dollar Tree a defensive stock right off the bat. However, the company’s business strategy could attract more consumers as stimulus funds begin to dry up. For the uninitiated, the company operates via a network of over 15,000 discount stores. The likes of which span across 48 U.S. states and Canada.
Now, as the name suggests, all of the items at Dollar Tree’s stores cost $1 or less. Should consumers be looking to save on certain everyday items, Dollar Tree could be a go-to. At the same time, DLTR stock has mostly been trading sideways for the past month. Would this present an opportunity for investors now? Notably, investment management firm Madison Funds appears to believe so. In its recent second-quarter investor letter, the firm provided a rosy update regarding its holdings in Dollar Tree.
Namely, the firm wrote, “Operating as the only ‘true’ fixed-dollar-price-point retailer at scale, Dollar Tree has carved out a unique position within the retail landscape that has proven very difficult for others to replicate. The model’s consistent demand profile is equally impressive, with the business only reporting one negative year of same-store-sales growth over the past 25 years.” Not to mention, Dollar Tree also saw green across the board in its latest quarter fiscal posted back in May. In particular, the company posted year-over-year gains of 51% in net income and 53% in earnings per share. With Dollar Tree set to report its second-quarter fiscal this week, would you consider investing in DLTR stock?
