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TheStreet Open House

9 Defensive Stocks to Play

Stocks in this article: KFT PEP PFE AMGN MKC HUM BA

NEW YORK ( TheStreet) -- These nine stocks are likely to provide sufficient cushion in the current period of extreme skepticism, compared to their counterparts. In the past three months, these defensive plays returned an average 13.7%, vs. the S&P 500's 6.4%. Upside potential for these stocks is 6% to 18% with mean value of 11%, and average buy rating is 68%.

Analysts covering these stocks have buy guidance of 53% to 78%.

The stocks are listed in ascending order of upside potential.


9. Kraft Foods (KFT) sells and manufactures packaged food products, including biscuits, beverages, confectionery, convenient meals, cheese and other packaged groceries in over 170 countries. It has three operating segments: Kraft Foods North America, Kraft Foods Europe and Kraft Foods Developing Markets.

Of the 21 analysts covering the stock, 71% recommend a buy and 24% suggest a hold. The stock's average 12-month price target is $39.25, about 6.3% higher than the current price, according to a Bloomberg consensus.

Net revenue for the third quarter of 2011 rose 11.5% to $13.2 billion, vs. $11.9 billion reported in the same quarter prior year. Organic revenue grew 8.4%, year-over-year. At the segment level, Kraft Foods North America, Kraft Foods Europe and Kraft Foods Developing Markets revenue rose 4.4%, 16.1% and 20.3%, respectively. Operating income rose 11.8% to $1.7 billion. Net income improved to $922 million, or 52 cents per diluted share, compared to $754 million, or 43 cents per diluted share.

Data from Bloomberg show that the company has a current dividend yield of 3.1% and a net income CAGR of 9.3%. The company generated 8.1% returns in the past three months. Kraft has declared regular quarterly dividend of $0.29 per common share, payable Jan. 13, 2012 to stockholders of record Dec. 30, 2011.

Kraft has raised its organic revenue guidance for 2011 to at least 6% from at least 5% and has revised its operating EPS guidance to at least $2.27 from at least $2.25.

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