This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Defensive Stocks for Quick Trades as Crisis Looms

Investors are assuming things are shaping up more in that direction "...than it did earlier in the week; that the U.S. government will step in again to prop up the economy", said Bob Gelfond, CEO of MQS Asset Management, a New York hedge fund.

QE3 style government intervention drives down the perceived value of the dollar, which had been rising lately. Gold is still viewed as a hedge against inflation, which is part of the reason it skyrocketed over 4% on Friday to $1,626 an ounce.

The yield on the 10-year U.S. Treasury bond sank to an all-time low last week of 1.46%, so at some point it also looks like total-return investors may start chasing dividend yields.

They'll consider stocks like utilities, consumer staples and maybe even healthcare stocks.

Take a look at the healthcare sector and its representative ETF, the Health Care Select SPDR (XLV).

Pfizer (PFE - Get Report) makes up 12% of the weighted holdings of XLV and pays a 4% dividend. Johnson & Johnson (JNJ - Get Report) (JNJ) also weighs in at 12% of the XLV, and pays close to a 4% dividend.

J&J is currently trading at a forward price-earnings ratio of below 12, and Pfizer is at a forward P-E ratio of only 9.21.

A majority of analysts prefer J&J because it's perceived as the world's largest healthcare company with a gigantic compliment of products including over-the-counter treatments, prescribed drugs and medical devices.

Look at a one-year comparative chart of J&J and Pfizer to guide you. When you study it carefully, you'll see they tend to move in tandem.

Neither J&J nor Pfizer have out-performed the S&P 500 but they may temporarily be perceived as stocks that are safe havens that pay the shareholder to wait and see what else goes on sale before the current stock market correction runs its course.

They may see a temporary "pop" before the blood stops running in the street. Then there will be even better opportunities that I'll steer you towards before the rest of Wall Street wakes up to what's happening.

Disclosure: At the time of publication, Marc Courtenay was long GG, IAG, and KGC.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
XLV $70.86 -0.53%
GG $18.96 6.10%
JNJ $112.48 -0.26%
IAG $3.18 5.65%
PFE $32.91 -0.27%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs