Defensive Stocks for the “Worst Months” By: Jeffrey A. Hirsch | June 20, 2019 | Email | Print

These 19 stocks were selected from the top performing sectors for the “Worst Six Months.” The sectors we focused upon were Healthcare, Consumer Staples and Utilities. Things have changed from last year this time. With interest rates in decline and the stock market at rather lofty levels Wall Street has already been talking about and driving up the shares of consumer staples and utilities stocks. Healthcare stocks have been consolidating and some of the big names are undervalued. In a bid to potentially further reduce risk; this basket is comprised mostly of large-cap stocks with valuations in excess of $5 billion. Only six mid-cap trade ideas survived the screening process.

 

We first sifted through the universe of nearly 8,000 U.S. traded stocks for those with a market cap of at least $1 billion and average daily volume of 100,000 shares or more on average over the past twenty trading sessions. Then we winnowed the list down to only those stocks with relatively low price-to-sales and price-to-earnings ratios. From there we searched for stocks that were exhibiting consistent and/or growing revenue and earnings trends.

 

We then dug into numerous individual company charts before settling on these final 19 stocks. Our underlying theme was to find reasonably priced stocks within the three sectors that have exhibited the most consistent returns during the “Worst Six Months.” Yields for this basket of stocks range from a low of 1.73% from our old favorite UnitedHealth Group (UNH) to a high of 7.34% by Pattern Energy (PEGI). The entire basket average yield is 3.69%.

 

We will look to add these 19 stocks, in the table below, near current levels. We will allocate a hypothetical $2000 from the cash position in the portfolio to each position. For each stock we have provided the ticker, name, sector, PE, price-to-sales ratio, market value, a dividend yield and a suggested buy limit and stop loss.