It’s been a bumpy ride for the market recently, but some stocks may serve as a haven for investors amid the heightened volatility. Stocks are down so far this week after economic data released Tuesday raised concerns that inflation is staying stubbornly above the Federal Reserve’s 2% target, leading to a spike in Treasury yields. On top of that, a tech stock sell-off Tuesday weighed on the broader market. The tech-heavy Nasdaq Composite is down the most this week, falling nearly 1% through Wednesday. The broad market S & P 500 and the blue-chip Dow Jones Industrial Average are dropping about 0.4% and 0.2%, respectively. In the face of this performance, Wolfe Research screened for defensive stocks, using the following criteria: High Dividend Yield (minimum 3%) Low Payout Ratio (less than 90%) Limited Leverage (less than 3x) Here are some of the companies that surfaced. Ford Motor was one of the key names that made the screen, boating a dividend yield of 6%, a payout ratio of 35% and a net leverage ratio of 0.3 times earnings. While shares fell more than 13% in 2024, they jumped more than 2% on Friday after the automaker posted its best annual U.S. new vehicle sales since 2019 . That said, most analysts have stepped to the sidelines on Ford. According to LSEG data, 15 of 26 analysts covering Ford on Wall Street have a hold rating, while only six rate it the equiavlent of buy. Analysts still see substantial gains ahead, however, as Ford’s average 12-month price target of roughly $11 implied about 18% potential upside, based on Wednesday’s close. By contrast, a little more than half of the analysts that cover Medtronic are bullish. The medical equipment maker pays a dividend yield of 4%, has a payout ratio of 48% and a net leverage ratio of 2 times earnings. Among the 33 analysts covering Medtronic, 16 rate it a strong buy or buy, while 15 have a hold rating. And while the stock dipped about 3% last year, analysts think the stock is now poised for gains, with an average price target of roughly $95 implying more than 15% upside from Wednesday’s close. On Wednesday, Medtronic advanced more than 3% after rival Johnson & Johnson – another stock that turned up on Wolfe’s screen – confirmed that it temporarily paused the use of its new heart device known as Varipulse after four reported neurovascular events. Rival Boston Scientific also rose more than 4% during the session after the news, while Johnson & Johnson fell nearly 3%. With that latest move, Medtronic shares have outperformed the S & P 500 in the past six months, rising more than 7%. MDT 6M mountain MDT, 6-month Coca-Cola is coming off a positive year, advancing nearly 9% in 2024. On Wednesday, shares of the beverage company gained more than 1% after getting an upgrade to buy from hold at TD Cowen, which said it’s “at the top of its game” in execution. That call joins 19 other analysts on the Street who are optimistic about Coke’s future, giving it a strong buy or buy rating. Of the 27 analysts covering Atlanta-based Coke, seven have a hold rating. From here, analysts’ average 12-month price target of roughly $73 implies about 19% potential upside.
These stocks are safe places to hide as market turbulence rattles Wall Street
Jan 9, 2025
