{"id":299548,"date":"2022-11-02T16:00:53","date_gmt":"2022-11-02T20:00:53","guid":{"rendered":"https:\/\/stockchase.com\/discover\/?p=299548"},"modified":"2022-11-02T16:00:53","modified_gmt":"2022-11-02T20:00:53","slug":"3-safe-stocks-defensive","status":"publish","type":"post","link":"https:\/\/stockchase.com\/discover\/3-safe-stocks-defensive\/","title":{"rendered":"3 Must Have Safe Stocks to Play Defensive"},"content":{"rendered":"<p>After last week&#8217;s Halloween horror show called megatech earnings (i.e. Amazon, Meta et al), investors are looking for something different. Some safe stocks. That refuge is defensive stocks: predictable, boring and\u00a0safe stocks that pay limited but predictable returns in a time of volatility. We&#8217;re talking industrials, American health care and Canadian banks. Here are some ideas:<\/p>\n<p><img decoding=\"async\" class=\"alignnone size-medium wp-image-299936\" src=\"https:\/\/stockchase.com\/discover\/wp-content\/uploads\/2022\/11\/HON-N-1-760x254.png\" alt=\"HON-N stock chart\" width=\"860\" \/><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Discover What&#039;s Inside<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/stockchase.com\/discover\/3-safe-stocks-defensive\/#Honeywell_International_HON-N\" >Honeywell International (HON-N)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/stockchase.com\/discover\/3-safe-stocks-defensive\/#Merck_Company_MRK-N\" >Merck &amp; Company (MRK-N)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/stockchase.com\/discover\/3-safe-stocks-defensive\/#BMO_Aggregate_Bond_Index_ZAG-T\" >BMO Aggregate Bond Index (ZAG-T)<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Honeywell_International_HON-N\"><\/span><a href=\"https:\/\/stockchase.com\/HON-N\">Honeywell International (HON-N)<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>This conglomerate has its fingers in many pies: aerospace (i.e. engines, navigation systems and aircraft lighting); building controls (e.g. climate controls, video surveillance and lighting sensors); household goods (think humidifiers); and gas detection equipment and personal protection equipment. However, it&#8217;s <a href=\"https:\/\/stockchase.com\/HON-N\">Honeywell<\/a>&#8216;s <img alt=\"HON-N stock price chart\" decoding=\"async\" src=\"https:\/\/data.wealthica.com\/api\/securities\/HON-N\/chart?labels=tru\" width=\"125\" align=\"right\" \/> aerospace operation, amounting to roughly a third of its overall business, that attracts investors, given how air travel has awoken from its Covid coma. Just witness recent quarters by <a href=\"https:\/\/stockchase.com\/UAL-Q\">United Air<\/a> and Delta, announcing how strong demand is, even rivaling 2019 levels.<\/p>\n<p>Honeywell has held up well this year, down only 4% compared to the Nasdaq&#8217;s -30%, which makes this a fairly safe stock. For the most part, HON stock has been rangebound between $170 and $200 and currently is riding the market upswing and returning to $200. It could break this level and return to its 52-week high of $228.26 as the market enters a historically strong period, given the U.S. midterm election which typically rises after that vote. In the meantime, shareholders are paid a 2.1% dividend as it trades at a 27x PE though Honeywell&#8217;s forward PE of 20.24x is more inline with the company&#8217;s historic average. (A caveat, but not a dealbreaker.)<\/p>\n<p>The company reported its Q3 last week and impressed the street. Year-over-year, revenues rose 9%, the topline climbed 5.6%, the bottom 11.4%, organic sales rose 9% while free cash flow jumped 100%. Traders and investors can take a position now. Buying a dip would be better, but the macro direction points upward rather than towards volatility. Mind you, this is 2022, the year of choppiness.<\/p>\n<p><img decoding=\"async\" class=\"alignnone size-medium wp-image-299937\" src=\"https:\/\/stockchase.com\/discover\/wp-content\/uploads\/2022\/11\/MRK-N-1-760x254.png\" alt=\"MRK-N stock chart\" width=\"860\" \/><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Merck_Company_MRK-N\"><\/span><a href=\"https:\/\/stockchase.com\/MRK-N\">Merck &amp; Company (MRK-N)<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>U.S. health care is a profitable segment of the stock market that has many safe stocks. After all, there will always be demand for drugs and surgeries, especially as the baby boomers age. <a href=\"https:\/\/stockchase.com\/MRK-N\">Merck<\/a> <img alt=\"MRK-N stock price chart\" decoding=\"async\" src=\"https:\/\/data.wealthica.com\/api\/securities\/MRK-N\/chart?labels=tru\" width=\"125\" align=\"right\" \/> is definitely on an uptrend, breaking past $100 as October ends to establish new 52-week highs. The stock&#8217;s catalyst was its sterling Q3 report last week where it beat earnings and revenues and upgraded its forecast. Year-over-year, earnings were up 4% (7% if you exclude the impact of the strong USD) and revenues rose 14% (18% considering currency). Drivers were strong sales of Merck&#8217;s cancer drugs and many vaccines. The pharmaceutical side boasted a 13% hike in sales YOY. Merck&#8217;s key drug, Keytruda, saw sales jump 20%. One of the new weaknesses in Merck was its animal health business where the strong greenback depressed sales by 3%.<\/p>\n<p>Nonetheless, MRK stock modestly raised its guidance from $57.5-58.0 billion in 2022 revenues to $58.5-59.0 billion. Note: These revisions account for the 4% negative impact of currency conversions (that pesky U.S. dollar again).<\/p>\n<p>Other notes: MRK stock pays a safe 2.82% dividend yield and trades at a very low bet of 0.33 and PE of 6.55x. This safe stock offers you stability, safety\u00a0and a positive outlook. The question now becomes how much further it will rise, since shares have jumped from $87 to $100 in October alone.<\/p>\n<p><img decoding=\"async\" class=\"alignnone size-medium wp-image-299935\" src=\"https:\/\/stockchase.com\/discover\/wp-content\/uploads\/2022\/11\/BMO-Aggregate-Bond-Index-ZAG-T-1-760x254.png\" alt=\"BMO Aggregate Bond Index ZAG T\" width=\"860\" \/><\/p>\n<h3><span class=\"ez-toc-section\" id=\"BMO_Aggregate_Bond_Index_ZAG-T\"><\/span><a href=\"https:\/\/stockchase.com\/ZAG-T\">BMO Aggregate Bond Index (ZAG-T)<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>As yields rise\u2014and will continue to\u2014it&#8217;s worth considering this stodgy, boring corner of the market called bonds. While bonds won&#8217;t make you rich overnight, they won&#8217;t <a href=\"https:\/\/www.msn.com\/en-us\/finance\/other\/meta-shares-plummet-20-25-in-pre-market-after-q3-revenue-decline\/ar-AA13qF13\" target=\"_blank\" rel=\"noopener\">plummet like the Metas<\/a> of the world. Given the vast universe of Canadian bonds, a simple way to invest in domestic fixed income in one shot is through ETFs like ZAG. This basket mostly holds bonds with 6-8-year duration. Shorter duration offers less volatility, but the worst of the bond market is likely behind us.<\/p>\n<p><a href=\"https:\/\/stockchase.com\/ZAG-T\">ZAG<\/a> <img alt=\"ZAG-T stock price chart\" decoding=\"async\" src=\"https:\/\/data.wealthica.com\/api\/securities\/ZAG-T\/chart?labels=tru\" width=\"125\" align=\"right\" \/> has trended down for much of this year, from a high of $15.84 to $12.95, but this ETF has been climbing of late. Meanwhile, you&#8217;re paid a safe 3.55% dividend to wait and paying only 0.09% in MER. The beta is 1.01.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>After last week&#8217;s Halloween horror show called megatech earnings (i.e. Amazon, Meta et al), investors are looking for something different. Some safe stocks. That refuge is defensive stocks: predictable, boring and\u00a0safe stocks that pay limited but predictable returns in a [&hellip;]<\/p>\n","protected":false},"author":12,"featured_media":282868,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"cwp_meta_box_check":"No","cwp_rev_product_name":"","cwp_rev_product_image":"","wppr_links":[],"cwp_rev_price":"","wppr_options":[],"wppr_pros":[],"wppr_cons":[],"footnotes":""},"categories":[17],"tags":[],"class_list":["post-299548","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-lists"],"wppr_data":{"cwp_meta_box_check":"No"},"_links":{"self":[{"href":"https:\/\/stockchase.com\/discover\/wp-json\/wp\/v2\/posts\/299548","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stockchase.com\/discover\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stockchase.com\/discover\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stockchase.com\/discover\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/stockchase.com\/discover\/wp-json\/wp\/v2\/comments?post=299548"}],"version-history":[{"count":0,"href":"https:\/\/stockchase.com\/discover\/wp-json\/wp\/v2\/posts\/299548\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/stockchase.com\/discover\/wp-json\/wp\/v2\/media\/282868"}],"wp:attachment":[{"href":"https:\/\/stockchase.com\/discover\/wp-json\/wp\/v2\/media?parent=299548"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stockchase.com\/discover\/wp-json\/wp\/v2\/categories?post=299548"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stockchase.com\/discover\/wp-json\/wp\/v2\/tags?post=299548"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}