You get the sense the investors are pretty sure that the days of no volatility and calm markets that always seem to go higher are over, and it’s probably about time. For years, investors saw the market grind its way higher from a breakout over 1,500 on the S&P 500 on April 1 of 2013, to the current 2,717 level, a staggering 80% move. But 2018 has changed all that, and it may be time to get defensive.
Defensive sectors like consumer staples, utilities, telecommunications and real estate investment trusts (REITs) may be boring, but they are good areas to be in if the market decides to blow up. We screened the top stocks in those sectors in the Merrill Lynch research universe database and found five stocks rated Buy with which you can sleep at night.
This top Warren Buffet holding not only offers safety but an incredibly strong worldwide brand with 40% overseas sales. Coca-Cola Co. (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands.
Led by Coca-Cola, one of the world’s most valuable and recognizable brands, the company’s portfolio features 20 billion-dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del Valle. Globally, it is the number one provider of sparkling beverages, ready-to-drink coffees and juices and juice drinks.
Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy Coca-Cola beverages at a rate of more than 1.9 billion servings a day. With coolers getting packed for picnics, parades and vacations you can bet that they will be stuffed with products from this iconic American company. Also remember that the company also owns 16.7% of Monster Beverage, which continues to deliver big numbers.
Coca-Cola investors are paid a solid 3.58% dividend. The Merrill Lynch price target for the stock is $52, while the Wall Street consensus target is set at $49.87. The stock traded early Tuesday at $43.43 apiece.
Duke Energy Corp. (NYSE: DUK) operates as a regulated utility company in the United States and is based in Charlotte, North Carolina. The company operates regulated electric utilities in the Midwest, Florida and the Carolinas and supplies electric service to approximately 7.5 million residential, commercial and industrial customers. Duke owns 50,000 megawatts of capacity.
The regulated gas utilities serve more than 1.6 million customers in the Carolinas and Ohio. A commercial arm owns contract renewables and pipelines across the United States. The Merrill Lynch analysts recently upgraded the stock and noted why:
We upgrade shares to Buy and raise our price target as we up estimates are a victim of large-cap regulated utility sell-off. Wall Street still does not believe management at $5.19 versus the Merrill Lynch estimate of $5.35 and implied range of $5.30-5.60. Story has been sizably de-risked in North Carolina, trading at 3-yr low and a 15% discount to peers on 2020 price to earnings.
Duke Energy shareholders are paid an outstanding 4.5% dividend. The Merrill Lynch price target now stands at $84, above the consensus target of $82.14. The shares traded at $78.85 Tuesday morning.