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5 Defensive Stocks to Buy as Coronavirus Cases Rise Again

Zacks Equity Research
·5 min read

Markets plunged on Jun 11 as rising COVID-19 cases forced investors to reassess their position. The Dow, the S&P 500 and the Nasdaq declined 6.9%, 5.9% and 5.3%, respectively. Both the S&P 500 and the Dow finished at their lowest levels since May 26, while the Nasdaq closed at its lowest level since May 29.

Shares of Boeing and Dow plunged 16.4% and 9.9%, weighing heavily on the blue-chip index. The decline marked Dow’s worst daily drop since Mar 16. The S&P 500’s decline was led by energy and financials sector’s drop of 9.5% and 8.2% respectively. In fact, only one stock in the broader index ended in the green. Grocery chain Kroger edged up 0.4%.

New Cases Rise in More Than 20 States

Recently, markets witnessed an upside with states lifting coronavirus-led lockdowns. However, investors now are concerned with an alarming rise in new COVID-19 cases. Per Johns Hopkins University’s report, the United States has crossed the two million COVID-19 infected mark with nearly 112,000 dead so far.

In spite of some cities and states reporting fewer cases, the seven-day average of new cases in the past two weeks has risen in more than 20 states. This is making investors jittery as they believe that a second wave of the outbreak could hit the economy, which has just started reopening.

The head of the National Institute of Allergy and Infectious Disease, Dr. Anthony Fauci said that the pandemic is not over yet. Moreover, public-health experts have raised concerns that citizens will suffer unnecessary hardship and there may be more deaths if the virus spreads due to the reopening.

With no vaccine or cure found yet, healthcare officials are still counting on social distancing to avoid the resurgence of the novel coronavirus.

5 Stocks to Buy Now

Investing in defensive stocks like utilities, healthcare and consumer staples can be beneficial in the current scenario. These stocks deal in products and services that fulfill basic needs and thus are in constant demand. Even though the coronavirus outbreak has forced people to stay at home, requirement for essential items like food, medicines, water and electricity remains unchanged.

Defensive stocks provide stable returns regardless of market gyrations, leaving demand for these constant even during a pandemic.

Though these stocks do not give high returns when the economy is expanding, compared to technology and cyclical sectors, these act as safe assets for investors.Given the current scenario we have shortlisted five defensive stocks that can return well on investment.

B&G Foods, Inc. BGS manufactures, sells, and distributes a portfolio of shelf-stable and frozen foods, and household products. The company has an expected earnings growth rate of 21.3% for the current year against the Zacks Food - Miscellaneous industry’s projected decline of 2.3%.

The Zacks Consensus Estimate for its current-year earnings has climbed 19.2% over the past 60 days. B&G Foods sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

The Clorox Company CLX manufactures and markets consumer and professional products. The company has an expected earnings growth rate of 9.3% for the current year against the Zacks Soap and Cleaning Materials industry’s projected decline of 2.7%. The Zacks Consensus Estimate for its current-year earnings has moved up 7.5% over the past 60 days. The Clorox Company sports a Zacks Rank #1.

AbbVie Inc. ABBV discovers, develops, manufactures, and sells pharmaceuticals. The company has an expected earnings growth rate of 19.8% for the current year compared with the Zacks Large Cap Pharmaceuticals industry’s projected growth of 9.7%. The Zacks Consensus Estimate for its current-year earnings has moved 14.2% up over the past 60 days. AbbVie has a Zacks Rank #1.

Axcella Health Inc. AXLA is a clinical-stage biotechnology company that researches and develops endogenous metabolic modulators. The company has an expected earnings growth rate of 40% for the current quarter against the Zacks Medical - Biomedical and Genetics industry’s projected decline of more than 100%. The Zacks Consensus Estimate for its current-year earnings has climbed 30.7% over the past 60 days. Axcella Health sports a Zacks Rank #1.

American States Water Company AWR provides water and electric services to residential, industrial, and other customers. The company has an expected earnings growth rate of 6.6% for the current year against the Zacks Utility - Water Supply industry’s projected decline of 4.3%. The Zacks Consensus Estimate for its current-year earnings has moved up 1.8% over the past 60 days. American States Water carries a Zacks Rank #2 (Buy).

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The Clorox Company (CLX) : Free Stock Analysis Report
 
American States Water Company (AWR) : Free Stock Analysis Report
 
BG Foods, Inc. (BGS) : Free Stock Analysis Report
 
AbbVie Inc. (ABBV) : Free Stock Analysis Report
 
Axcella Health Inc. (AXLA) : Free Stock Analysis Report
 
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