3 Defensive Stocks to Shield Your Portfolio from this Market Volatility
These companies share a solid, long-term track record, with high performance in any type of market
- Build a fortress with three defensive stocks to shield your portfolio from market volatility.
- JPMorgan Chase (NYSE:JPM): The world’s biggest bank just reported blowout earnings.
- PepsiCo (NYSE:PEP): The soft drink and food company is largely insulated against market downturns.
- Apple (NASDAQ:AAPL): The consumer electronics giant remains the most reliable of tech stocks.
- Creating a mote around your portfolio with these three stocks would reinforce its strength in a potentially unstable time.
Market volatility persists even as the stock market is up on the year.
Both economic data and central bankers’ commentary about the direction of interest rates continue to cause gyrations in equity markets. China reports poor trade figures (slowing GDP figures) and oil price drops, which pull stocks lower. Better-than-expected inflation numbers in the U.S. send equities soaring. And whenver U.S. Federal Reserve Chair Jerome Powell comments publicly on interest rates, markets seem to have a fit. This can be nerve-wracking for investors, especially for people who check their portfolio constantly.
So, how can you shield your portfolio from market volatility?
Purchasing defensive stocks can make a big difference. These are stocks of typically blue-chip companies that are profitable and able to perform strongly in any market and economic condition. Finding these reliable names and adding them to a portfolio can help ensure that less pain is felt during times of upheaval in the stock market. Let’s take a close look at these three defensive stocks to protect your portfolio from this market volatility.
JPMorgan (JPM)
JPMorgan Chase (NYSE:JPM), the world’s biggest bank with $3 trillion of assets under management, just reported exceptionally strong second-quarter results. The New York lender announced that its Q2 net income increased 67% to $14.5 billion due to rising income from higher interest rates. Earnings per share (EPS) came in at $4.37 versus $4 that had been forecast among analysts who track the company’s progress. Revenue in Q2 came in at $42.4 billion compared to $38.96 billion that was forecast on Wall Street.
The bank attributed the earnings beat to higher rates and strong loan growth. JPMorgan said its revenue growth was driven higher by a 44% increase in its net interest income to $21.9 billion. The amount of loans issued by the lender rose 13% during the quarter. The latest earnings print proves that JPMorgan is a solid company that performs well in any type of market and economy. JPM stock has risen 35% in the past 12 months, including a 12% gain so far in 2023.
PepsiCo (PEP)
Beverage and snack giant PepsiCo (NYSE:PEP) is another reliable blue-chip stock that can fortress a portfolio from volatility. The company behind the Pepsi soft drink, Lay’s potato chips, and Quaker oatmeal, just reported better-than-expected second quarter earnings and raised its full-year guidance. Pepsi announced EPS of $2.09 for the quarter ended June 30. That was better than consensus Wall Street forecasts for earnings of $1.96 a share.
Revenue rose 10% from a year ago to $22.32 billion versus $21.73 billion that was anticipated.
Looking ahead, PepsiCo said it expects its full-year revenue to grow a further 10%, compared with a previous forecast of 8% growth. The company foresees earnings of $7.47 per share for all of this year, up from an earlier forecast of $7.27. With its focus on popular consumer food products, PepsiCo is the kind of company that sails through periods of volatility and can perform strongly even in an economic downturn. PEP stock is up 11% in the past 12 months.
Apple (AAPL)
If there’s one tech stock that can be considered a defensive play and reliable performer, it’s consumer electronics giant Apple (NASDAQ:AAPL). The tech mammoth is fresh off achieving a $3 trillion market capitalization, becoming the first publicly traded company to do so and making it the world’s most valuable concern. AAPL stock is also one of the few mega-caps that pays a quarterly dividend to shareholders, offering a yield of 0.50%.
And, Apple buys back more of its own stock than any other public company.
It owes its enduring popularity and strong sales to its key products, the iPhone, iPad, and MacBook computer. AAPL stock has proven to be a consistent winner over the years, gaining 31% over the last 12 months and more than 300% through five years. Few other tech stocks have produced such consistent gains for stockholders. Apple also remains a cash generating machine. With stable management under the direction of long-time CEO Tim Cook, Apple continues to push into new areas such as streaming and finance.
On the date of publication, Joel Baglole held a long position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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