While purchasing a stock may seem simple, selecting the correct one without a tried-and-tested approach can be extremely difficult. Therefore, identifying the optimal stocks to acquire presently or monitor requires careful consideration. In times of increased uncertainty, many investors are rightly turning to defensive stocks as a way to play the current market. Unfortunately, defensive stocks are just about as difficult to pick as any other group.
Defensiveness is key to many investors, in light of the ongoing aggressive policy stance taken by the Federal Reserve. In a bid to stomp out inflation, the Fed has raised rates at its fastest pace in decades. For growth stocks and other interest rate sensitive areas of the economy, this has been bad news.
However, these three companies have held up relatively well and have weathered their fair share of previous crises.
Thus, without further ado, let’s dive into three defensive stocks worth buying in April, for those looking to reposition their portfolios.
JPMorgan Chase (JPM)
If you identify as a committed contrarian and value investor, JPMorgan Chase (NYSE:JPM) stock is worth considering. Unlike other financial institutions, the company is not excessively reliant on Treasury bonds, thereby minimizing the risk of failure. Additionally, recent turmoil in the banking sector suggests clients also abandon less trustworthy banks, transferring their deposits to established financial powerhouses such as JPMorgan Chase.
With several mid-sized banks failing in recent weeks, consolidation in the financial sector is taking hold once again. Thus, those bullish on JPM from a growth perspective will certainly like how the bank is positioned in this regard.
That said, it’s JPMorgan’s defensive positioning, and size, which allows the bank the optionality to pursue such deals. We’ll see if any additional buyouts take place in the coming weeks. But for now, the company’s rolling 12-month price-to-earnings ratio of just 10.6-times is attractive, considering the expectations for earnings growth on the horizon.
Sure, we may be headed into a recession, and earnings may decline. Perhaps issues within the banking sector are more widespread than many initially thought. Time will tell with respect to these factors.
That said, I think JPM stock is the best-in-class option in the financials sector for those looking to hunker down. With a yield of 3.07%, investors are paid to be patient and ride out any period of uncertainty from here.
Tech giant Apple (NASDAQ:AAPL) has seen revenues dip due to production constraints and negative macroeconomic conditions, which has caused its share price to stagnate over the past year. Despite this, many investors may rightly be contemplating whether AAPL is worth buying. Indeed, the stock has been on an incredible run to start 2023, and this momentum could continue moving forward.
Apple is currently the most prominent firm worldwide, particularly in terms of market weighting. The tech behemoth has amassed a dedicated following of enthusiasts, with each product launch generating immense hype worldwide, bordering on a cult-like fervor. Indeed, Apple is overall met with great excitement from numerous devoted fans, who often purchase the latest gadgets with unwavering eagerness
The current economic period is characterized by high inflation, escalating interest rates, and sluggish growth, which undoubtedly presents significant challenges. Although a recession would undoubtedly hurt the company’s revenue, investors can still count on consistent demand from consumers who consider Apple’s gadgets crucial.
As a result, Apple might navigate through an economic downturn with minimal damage, while reaping the rewards of elevated demand when the economy eventually picks up. There are numerous appealing aspects to investing in AAPL. That said, the company’s status as one of the best defensive stocks to buy now can’t be debated.
Coca-Cola (NYSE:KO) is an ideal option for those seeking a dependable, defensive stock with a steady dividend. The well-known beverage company, favored by Warren Buffett, has gained a significant following as an attractive investment opportunity. With a negligible fall from its peak, and a stock price that’s still hovering around the top end of its five-year band, KO stock is trading at a valuation that’s near its all-time high.
So, then, why is now a great time to consider Coca-Cola?
Well, many of the same arguments are true for KO as with the other stocks on this list. Coca-Cola is one of the world-class defensive stocks that investors flock to in times of trouble. Indeed, as a bastion of stability for top investors, this company has proven its ability to provide very consistent returns over decades. Most other companies can’t say the same thing.
Coke’s business model is less-cyclical, as beverages and snack items sell in good economic times and bad. Thus, Coke’s growth rate has been closely correlated to its ability to grow market share and acquire other brands over time.
I think the underlying investment thesis with owning KO stock remains intact. As far as long-term defensive stocks are concerned, Coca-Cola remains a top pick of mine.
On the date of publication, Chris MacDonald has a position in AAPL, KO. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.