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A Trio of Defensive Stocks for the Value Investor

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If you want to make your portfolio more resilient so that it will be strong enough to withstand recessions, the following defensive stocks may be suitable. These businesses have continued to generate earnings and dividends during economic recessions as they offer goods and services on which people do not typically cut their spending, even in times of financial distress.

Furthermore, as of the time of writing, these stocks offer compelling price-earnings ratios compared to the S&P 500's 29.41, as these are below or near the benchmark index. Also, Wall Street sell-side analysts have issued positive recommendations for them.


PepsiCo Inc.

The first stock investors could be interested in is PepsiCo Inc. (NASDAQ:PEP), a Purchase, New York-based manufacturer of soft drinks and snacks.

Over the past five years, the trailing 12-month diluted EPS from continuing operations ($5.87 as of September 2021 quarter) increased by 9.40% on average every year. During the past five years, the dividend per share ($4.20 for the trailing 12 months ended in September 2021) increased by 8.20% annually.

GuruFocus assigned a financial strength rating of 4 out of 10 and a profitability rating of 8 out of 10 to the company.

The share price closed at $171.82 on Thursday for a market capitalization of $237.57 billion, a price-earnings ratio of 29.27 and a forward dividend yield of 2.50%.

A Trio of Defensive Stocks for the Value Investor
A Trio of Defensive Stocks for the Value Investor

On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $168.07 per share.

Kellogg Co

The second stock investors could be interested in is Kellogg Co. (NYSE:K), a Battle Creek, Michigan-based global manufacturer and marketer of ready-to-eat cereal and convenience foods.

Over the past five years, the trailing 12-month diluted EPS from continuing operations ($3.66 as of September 2021 quarter) increased by 14.90% on average every year. During the past five years, the dividend per share ($2.30 for the trailing 12 months ended in September 2021) increased by 3% annually.

GuruFocus assigned a financial strength rating of 4 out of 10 and a profitability rating of 7 out of 10 to the company.

The stock traded at $65.78 at close on Thursday for a market capitalization of $22.44 billion, a price-earnings ratio of 17.97 and a forward dividend yield of 3.53%.

A Trio of Defensive Stocks for the Value Investor
A Trio of Defensive Stocks for the Value Investor

On Wall Street, the stock has a median recommendation rating of hold with an average target price of $67.53 per share.

Hormel Foods Corp

The third stock investors could be interested in is Hormel Foods Corp. (NYSE:HRL), an Austin, Minnesota-based producer and marketer of various meat and food products to retailers and other commercial customers in the U.S. and internationally.

Over the past five years, the trailing 12-month diluted EPS from continuing operations ($1.66 as of October 2021 quarter) increased by 0.60% on average every year. During the past five years, the dividend per share ($0.98 for the trailing 12 months ended in October 2021) increased by 11.10% annually.

GuruFocus assigned a score of 6 out of 10 to both the financial strength rating and the profitability rating of the company.

The share price was $49.19 at close on Thursday for a market capitalization of $26.69 billion, a price-earnings ratio of 29.63 and a forward dividend yield of 2.14%.

A Trio of Defensive Stocks for the Value Investor
A Trio of Defensive Stocks for the Value Investor

On Wall Street, the stock has a median recommendation rating of hold with an average target price of $46 per share.

This article first appeared on GuruFocus.