Defensive investment strategies are those that maintain holdings in safe assets, which include stocks that meet a certain criteria that avoids losses in market value. To do this, you need to find the important traits present in these companies, which are namely a robust balance sheet, strong liquidity and a proven ability to earn money over time. Below are a few options I am looking at: Alumina, St Barbara and South32.

Alumina Limited (ASX:AWC)

Alumina Limited, through its 40% interest in Alcoa World Alumina and Chemicals, engages in bauxite mining, alumina refining, and aluminum smelting businesses. Alumina was formed in 1970 and with the company’s market cap sitting at AUD A$7.43B, it falls under the mid-cap stocks category.

The company’s capital structureis attractive that features a healthy debt level of 4.78% of equity capital. This debt is also well-supported by cash flows generated from day-to-day operations, reaching 243.20% of borrowed funds, which makes investor capital robust against adverse market conditions. because it’s a mid-cap stock priced at AU$7.43B and a PE ratio of 16.51x, there are active participants in the market for the stock and there could still be room for value in the price, which minimises the potential for rapid share price falls in down cycles. The past 5 years show the company has grown earnings by 18.48% annually and recorded a ROA of 14.77% over the previous twelve months (compared to the industry’s 9.64%), showing AWC holds many of the keys to avoiding the potentially destructive forces of a bear market. Dig deeper into Alumina here.

St Barbara Limited (ASX:SBM)

St Barbara Limited, together with its subsidiaries, engages in the exploration, development, mining, and sale of gold. Established in 1969, and headed by CEO Robert Vassie, the company now has 1,900 employees and has a market cap of AUD A$2.41B, putting it in the mid-cap stocks category.

SBM is well-postioned financially as current assets surpass total liabilities by 4.72x. On top of this, cash flow from operations is well-above total debt by 2x, a strong sign, providing greater comfort for investors that the company is well-grounded if equities become out of favour. Moreover, as its price gives it a AU$2.41B value on the market and a PE of 13x, there is room for enough active participants in the market for the stock and there could still be space for value in the price, which minimises the potential for rapid share price falls in down cycles. As the past 5 years have seen annual earnings growth of 15.98% and a ROE of 32.75% in the most previous year, St Barbara Limited has some of the necessary characteristics to maintain value during a cyclical downfall in the market. Dig deeper into St Barbara here.