U.S. stocks have lately been on a rally, thanks to some encouraging payroll data that has somewhat alleviated fears of a sinking economy. Also, President Donald Trump’s temporary pause on tariffs and assurance that the White House is holding trade talks with several countries have been helping Wall Street.
However, consumers’ confidence is low as they are still reeling under fears that the economy might collapse into a recession. Also, there is no clarity on when the Federal Reserve will resume its rate cuts.
Given this situation, it would be wise to invest in safe-haven stocks like utilities and consumer staples. In this regard, The AES Corporation AES, Atmos Energy Corporation ATO, American Water Works Company, Inc. AWK, Keurig Dr Pepper Inc. KDP and Nomad Foods Limited NOMD are lucrative buys. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The stocks are also from the low-beta category (beta greater than 0 but less than 1). Hence, the recommended approach is to invest in low-beta stocks with a high dividend yield and a favorable Zacks Rank.
Consumer Confidence Hits a New Low
The Conference Board said last week that consumer confidence fell to 86, a decline of 7.9 points from the last month, the lowest reading since May 2020. April’s reading was also lower than the consensus estimate of a reading of 87.5.
The survey also showed that the Expectations Index, a gauge of the consumers' six-month outlook for business, income and labor market conditions, fell 12.5 points to 54.4. This is the lowest level since October 2011 and sharply below the threshold of 80 that signals an impending recession.
The Present Situation Index, a measure of the consumers' assessment of current business and labor market conditions, fell to 133.5, a decline of 0.9 points. The downbeat view was triggered by fears of a recession, which hit a two-year high. Also, tariff fears hit an all-time high for the survey.
Economy’s Health Weighing on Confidence
Trump’s tariff fears gripped markets in March and stocks have remained volatile since then. Although the President has announced a 90-day halt on tariffs, investors are still unclear on how the tariffs will shape up once they go into effect.
The White House has said that it is already holding trade talks with several countries. Trump also assured that tariffs on Chinese imports will be a lot less once a deal is reached. Presently, 145% tariffs are being charged on Chinese goods. However, consumers are still unclear about the negotiations with China.
This came as the U.S. economy shrank in the first quarter for the first time since Q1 of 2022. Gross domestic product (GDP) fell 0.3% in the first quarter of 2025, sharply lower than analysts’ expectations of a rise of 0.4% after GDP jumped 2.4% in the final quarter of 2024.
Inflation declined in March and Trump has been urging the Federal Reserve to go for rate cuts to boost the economy. However, the Fed is still maintaining a cautious approach and has shown no signs of going for a rate cut anytime soon. These uncertainties could keep markets volatile for a longer period.
5 Defensive Stocks With Upside
The AES Corporation
The AES Corporation is a global power company. AES’s businesses are spread across four continents in 14 countries. The AES Corporation has four Strategic Business Units (SBUs) located in the United States and other regions across the globe.
The AES Corporation has an expected earnings growth rate of 0.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.9% over the past 60 days. AES presently has a Zacks Rank #2. The AES Corporation has a beta of 0.94 and a current dividend yield of 6.91%.
Atmos Energy Corporation
Atmos Energy Corporation, along with its subsidiaries, is engaged in regulated natural gas distribution and storage business. ATO serves nearly 3.3 million customers in more than 1,400 communities in eight states from the Blue Ridge Mountains in the East to the Rocky Mountains in the West. Atmos Energyoperates more than 73,000 miles of transmission and distribution lines as well as 5,700 miles of interstate pipelines.
Atmos Energy has an expected earnings growth rate of 5.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 60 days. ATO presently carries a Zacks Rank #2. Atmos Energy has a beta of 0.74 and a current dividend yield of 2.15%.
American Water Works
American Water Works Company, Inc. provides essential water services to over 14 million customers in 24 states and has an employee strength of 6,500. AWK also acquires small water service providers to expand its customer base.
American Water Works Company has an expected earnings growth rate of 6.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 60 days. AWK presently carries a Zacks Rank #2. American Water Works has a beta of 0.73 and a current dividend yield of 2.08%.
Keurig Dr Pepper Inc.
Keurig Dr Pepper Inc. is a prominent integrated brand owner, manufacturer, and distributor of beverages across the United States, Canada, Mexico and the Caribbean. KDP’s extensive portfolio features well-known brands such as Dr Pepper, Canada Dry, Green Mountain Coffee Roasters, Snapple, Mott's, The Original Donut Shop, Clamato, Core Hydration, and the Keurig brewing system.
Keurig Dr Pepper has an expected earnings growth rate of 6.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.5% over the last 60 days. KDP presently carries a Zacks Rank #2. Keurig Dr Pepper has a beta of 0.52 and a current dividend yield of 2.67%.
Nomad Foods Limited
Nomad Foods Limited manufactures and distributes frozen foods primarily in the United Kingdom, Italy, Germany, Sweden, France and Norway. NOMD’s portfolio of frozen food brands includes Birds Eye, Iglo and Findus. Nomad Foods Ltd. is headquartered in Feltham, the United Kingdom.
Nomad Foods has an expected earnings growth rate of 11.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 11.4% over the last 60 days. NOMD presently carries a Zacks Rank #2. Nomad Foods has a beta of 0.81 and a current dividend yield of 3.38%.
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