Wall Street routed last week following the imposition of the Trump administration’s “Liberation Day” tariffs. The baseline tariff of 10% will be imposed on all imports from April 5. But the important thing is that tariff rates may go up to as high as 54% for some countries (such as China) depending on what rate these governments levy duties on U.S. exports.
China retaliated with 34% tariffs on all U.S.-made products to be imposed from April 10. This seems to be the beginning of a global trade war. Economists and financial experts are highly concerned about the impact of these tariffs on U.S. economic growth, especially on inflation, which is already elevated and prolonged. Market participants fear a near-term recession and, in the worst-case scenario, a stagflation in the U.S. economy.
At this juncture, investing in stocks from defensive sectors such as consumer staples, utility and health care with a favorable Zacks Rank will be the best option. Five such stocks are Molson Coors Beverage Co. TAP, CenterPoint Energy Inc. CNP, WEC Energy Group Inc. WEC, Abbott Laboratories ABT and HCA Healthcare Inc. HCA.
Wall Street’s Rout of Last Week
Dow recorded back-to-back losses of more than 1,500 points each on April 3 and 4, for the first time. On April 4, the blue-chip index decimated 2,231 points, one of the highest single-day decline in its history.
The broad-market index S&P 500 tumbled more than 10% on last two trading days of last week. On April 6, the benchmark plunged 6%, its worst-performing day since the coronavirus outbreak of March 2020. The index is currently in the correction zone with a more than 17% drop from its February peak.
The tech-laden Nasdaq Composite plummeted 6% on each of the last two trading days of last week. The tech-heavy index is currently in bear territory, collapsing more than 22% from its recent high. Moreover, the Wall Street fear gauge — the CBOE VIX — touched 45 on April 4, an extreme level, mostly associated with bear market.
Buy 5 Defensive Stocks to Protect Your Portfolio
Here are five defensive stocks that have strong growth potential for 2025. These stocks have seen positive earnings estimate revisions in the last 60 days. These companies are dividend payers, which will act as a regular income stream during the market’s downturn. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past month.
Zacks Investment Research
Image Source: Zacks Investment Research
Molson Coors Beverage Co.
Zacks Rank #1 Molson Coors Beverage Co. has benefited from strong performances in its Canada and EMEA&APAC businesses. This led to impressive fourth-quarter 2024 results, wherein the bottom and top lines surpassed the Zacks Consensus Estimate. Earnings also increased year over year. TAP’s revitalization plan and the premiumization of its global portfolio bode well.
The EMEA&APAC displays a significant ability to optimize for both beer and beyond beer. TAP projects 2025 sales to increase in low-single digits year over year on a constant-currency basis. It expects underlying EPS in 2025 to grow in high-single digits from 2024. TAP has also anticipated annual net price increases of 1-2% in North America.
Molson Coors Beverage has an expected revenue and earnings growth rate of 0.1% and 6.9%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last seven days. TAP has a current dividend yield of 3.07%.
CenterPoint Energy Inc.
Zacks Rank #2 CenterPoint Energy is likely to benefit from increasing electricity demand, backed by rapid electrification of transportation amid rising investments in renewable energy. CNP aims to invest substantially in upgrading its infrastructure. Successful returns from these investments should boost CNP’s long-term growth. CNP boasts a solid solvency position.
With the rapid electrification of the transportation sector, backed by growing clean energy adoption among industries across the board, the utilization of electric vehicles (EVs) has increased manifold in recent times.
To tap the growth benefits of the EV market, CenterPoint Energy has been investing significantly in building a smarter, cleaner and more resilient ecosystem to meet the needs of EV drivers and fleet operators. To this end, CNP has been actively promoting off-road electrification, including electric forklifts and carts.
CenterPoint Energy has an expected revenue and earnings growth rate of 3.2% and 8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 60 days. CNP has a current dividend yield of 2.44%.
WEC Energy Group Inc.
Zacks Rank #2 WEC Energy Group continues to benefit from contributions from its organic and inorganic assets. WEC’s strategic investments should strengthen its infrastructure to serve its customers base efficiently. LNG facilities and renewable assets should assist WEC in achieving its net carbon-neutral target by 2050.
Improving demand from large and small commercial and industrial and residential customers is boosting its performance. WEC Energy has sufficient liquidity to meet its near-term debt obligations. We expect total revenues to improve in the 2025-2027 period.
WEC Energy Group has an expected revenue and earnings growth rate of 9.2% and 8.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 30 days. WEC has a current dividend yield of 3.42%.
Abbott Laboratories
Zacks Rank #2 Abbott Laboratories uses AI to provide several health care solutions. ABT’s AI-powered technology provides micrometer-level medical imaging, which can capture image and risk data in the arteries of the eye or heart.
ABT’s machine learning algorithm has the ability to predict heart attacks enabling patients to take preventive measures. ABT is leveraging AI for advanced algorithms to transform medical imaging and diagnostics.
On a global scale, ABT currently holds a prominent position in point-of-care testing, with a portfolio focused on four key areas: Infectious Disease, Cardiometabolic & Informatics, Toxicology and Consumer Diagnostics.
Abbott Laboratories has an expected revenue and earnings growth rate of 5.9% and 10.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 60 days. ABT has a current dividend yield of 1.90%.
HCA Healthcare Inc.
Zacks Rank #2 HCA Healthcare’s revenues remain on an uptick on the back of growth in admissions and inpatient surgeries. The resumption of deferred elective procedures is likely to sustain the trend. Revenues are anticipated between $72.8 billion and $75.8 billion in 2025, the midpoint of which indicates a 5.2% rise from the 2024 figure.
Multiple buyouts of HCA have aided in increasing patient volumes and added hospitals to the portfolio. HCA is benefiting from its telemedicine business line. HCA’s operating cash flows rose 11.5% year over year in 2024.
HCA Healthcare has an expected revenue and earnings growth rate of 5.8% and 13.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the last 60 days. HCA has a current dividend yield of 0.87%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
