9 Defensive Stocks to Play

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.

8. PepsiCo ( PEP), a global food, snack and beverage company, operates through four business units: PepsiCo Americas Foods (PAF), PepsiCo Americas Beverages (PAB), PepsiCo Europe and PepsiCo Asia, Middle East and Africa. Some of its popular brands are Quaker Oats, Tropicana, Gatorade, Lay's, Pepsi, Walkers, Gamesa and Sabritas.

Of the 20 analysts covering the stock, 65% recommend a buy and 30% rate a hold. On average, analysts estimate 6.7% upside to $69.92 in value from current levels.

For the third quarter of 2011, the company recorded net revenue of $17.6 billion, a 13% increase from the year-ago quarter. Net income attributable to the company increased to $2 billion, or $1.25 per diluted share, from $1.9 billion, or $1.19 per diluted share earlier.

PepsiCo has a current dividend yield of 3.0% and a net income CAGR of 9.2%, based on data compiled by Bloomberg. Mid-November, the company declared quarterly dividend of 51.5 cents per share, up 7% from the year-ago quarter. The dividend is payable Jan. 3, 2012 to shareholders of record Dec. 2, 2011. In the past three months, the company accumulated 7.8% as compared to the 6.4% gain of S&P 500 Index.

Early November, the beverage company acquired Mabel, a leading producer of cookies, crackers and snacks in Brazil, aiming to strengthen its business in a key emerging market. Recently, PepsiCo announced that it would focus investments on its core indulgent brands following investors' criticism of too less investment in less profitable health products. Bernstein Research expects PEP to announce a multi-year plan early 2012 to revamp its business and invest almost $400 million to support its beverage brands in North America.

For 2011, the company estimates high single-digit earnings per share growth, including an estimated foreign exchange translation benefit of approximately 1 percentage point from its previous year. Also, it foresees benefits from the synergies acquisitions of bottlers and Wimm-Bill-Dann (WBD) during the year. Fitch Ratings expects a stable outlook for the U.S. beverage industry in 2012, citing improved credit measures.

7. Pfizer ( PFE) operates in the biopharmaceutical and consumer healthcare segments. The biopharmaceutical division includes specialty care, primary care, oncology customer-focused units, and established and diversified products. Consumer healthcare includes pain management therapies, dietary supplements, cough/allergy remedies, hemorrhoid care, other personal care items, nutrition products and Capsugel.

Of the 27 analysts covering the stock, 78% recommend a buy and 19% suggest a hold. Its average 12-month price target is $23.16, up 7.9% from the current price, as per a Bloomberg consensus.

For the third quarter of 2011, revenue grew 7% to $17.2 billion, vs. ~16.0 billion in the comparable period 2010. The biopharmaceutical and consumer healthcare segments reported sales increase of 6% and 15% year-over-year, respectively. Pfizer saw earnings of $3.7 billion, or 48 cents per diluted share, from $866 million, or 11 cents per diluted share in the prior year third quarter. During the quarter, PFE repurchased $2.1 billion shares and increased 2011 share repurchase target to $7 billion to $9 billion.

Pfizer has a current yield of 3.6% and a net income CAGR of 0.42%, Bloomberg reports. For first quarter 2012, dividend payable on common stock has been increased by 10% to 22 cents per share from 20 cents per share paid for the fourth quarter. The payment will be made on March 6, 2012 to shareholders of record Feb. 3.

Recently, Pfizer announced that the U.S. Food and Drug Administration (USFDA) has accepted for review the New Drug Application (NDA) for tofacitinib for adult patients with moderately to severely active rheumatoid arthritis. During the second week of December, the company reported positive results from Phase 3 trial of Lyrica (pregabaline) capsules CV in Restless Legs Syndrome.

For full year 2011, Pfizer's revenues guidance is in the $66.2 billion to $67.2 billion range, modestly higher than the previous view of $65.2 billion to $67.2 billion. Reported diluted EPS is forecast between $1.2 and $1.3, vs. the earlier outlook of $1.09 to $1.24.

6. Amgen ( AMGN), a biotechnology company, engages in the discovery, development, manufacture and marketing of medicines for grievous illnesses. Its major focus is on human therapeutics and medicines based on advancements in cellular and molecular biology.

Of the 28 analysts covering the stock, 61% recommend a buy and the rest rate a hold. There are no sell ratings on the stock. On average, analysts estimate 8.2% upside to $66.19 in value from current levels.

For the third quarter of 2011, AMGN recorded total revenue of $3,944 million, up 3% from the year-ago quarter. Adjusted diluted earnings per share increased to $1.40 from $1.36 in the prior year quarter.

Amgen has a current dividend yield of 0.5% and a net income CAGR of 4.7%, based on data compiled by Bloomberg. Recently, the company declared quarterly dividend of 36 cents per share for the first quarter of fiscal 2012, indicating 29% increase from the previous quarter. The dividend is payable March 7, 2012 to shareholders of record Feb. 15, 2012. In the past three months, the company accumulated 9.2% as compared to the S&P 500's 6.4% gain.

The company's revenue guidance for 2011 is in the range of $15.4 billion to $15.6 billion from $15.1 billion to $15.5 billion. Earnings per share are forecast between $5.15 and $5.30 from the earlier view of $5.00 to $5.20.

Recently, Amgen accepted for purchase 83.3 million shares of its common stock, or 9.5% of shares outstanding, at a price of $60 per share for an aggregate value of almost $5 billion, excluding fees and expenses related to the tender offer. Amgen and Watson Pharmaceuticals recently announced that they would collaborate to develop and commercialize several oncology antibody biosimilar medicines.

5. McCormick & Company ( MKC) engages in the manufacture, marketing and distribution of spices, seasonings, specialty foods and flavors to the food industry. Its sales, distribution and production facilities are located in North America and Europe.

Of the 17 analysts covering the stock, 53% recommend a buy and the rest rate a hold. There are no sell ratings on the stock. On average, analysts estimate 8.4% upside to $53.73 in value from current levels.

For the third quarter of 2011, the company recorded sales of $920 million, indicating an increase of 14.9% from the year-ago quarter. Operating income for the quarter increased to $100.5 million from $95.8 million earlier. Diluted earnings per share for the first nine months of the year grew to $1.81 from $1.66 in the same period previous year.

McCormick has a current dividend yield of 2.2% and a net income CAGR of 11.5%, Bloomberg reports. In the past three months, the company accumulated 8.9%, vs. 6.4% gain of S&P 500 Index. In the last week of November, MKC increased its quarterly dividend by 10.7% to 31 cents, payable Jan. 13, 2012 to shareholders of record Dec. 30, 2011.

For fiscal year 2011, sales are seen increasing in the range of 6% to 8% in local currency with an additional 2% estimated from favorable currency. Earnings per share are seen in the range of $2.74 to $2.79. With a significant 30% growth in quick service restaurant sales in local currency, MKC added that it is ramping up efforts in emerging markets.

4. Humana ( HUM) offers an array of health, pharmacy and supplemental benefit products through its medical centers and worksite medical facilities. The services offering target employer groups, government benefit programs, individuals, as well as primary and workplace care.

Of the 22 analysts covering the stock, 68% recommend a buy and the rest rate a hold. There are no sell ratings on the stock. On average, analysts estimate 12.6% upside to $97.57 in value from current levels.

Net income for the third quarter of 2011 was reported at $444.8 million, or $2.67 per diluted share, compared to $393.2 million, or $2.32 per diluted share, in the year-ago quarter. Meanwhile, total revenue increased 11.4% year-over-year to $9.3 billion. For the quarter, revenue from premiums and services soared 13%, led by a 10% increase in average Medicare Advantage membership.

Humana has a current dividend yield of 0.6% and a net income CAGR of 29.9%, based on data compiled by Bloomberg. In the past three months, the company accumulated 15.5% as compared to the S&P 500's 6.4% gain. The company has announced a dividend of 25 cents payable Jan. 31, 2012 to shareholders of record Dec. 30, 2011.

The company recently acquired Anvita Health -- a healthcare analytics company -- to strengthen its ability to help health plan members lead a healthy life. Humana has reportedly signed a multi-year contract with Piedmont Healthcare to provide its Medicare Advantage plan members access to Piedmont's four metro hospitals, starting Jan. 2012.

For full year 2011, the company has raised its earnings per share guidance range to $8.35 to $8.40 from the previous estimate of $7.5 to $7.6. Revenue is forecast in the range of $36.5 billion to $37 billion.

3. The Boeing ( BA) designs and produces commercial jetliners, defense systems and civil and defense space systems. Boeing's operations are organized into five business units: Boeing Commercial Airplanes, Boeing Military Aircraft, Network and Space Systems, Global Services and Support and Boeing Capital Corporation.

Of the 33 analysts covering the stock, 76% recommend buying and 21% rate a hold. A consensus forecast of analysts polled by Bloomberg have average 12-month price target of $81.95, for the stock, about 13.1% higher than the current price.

For the third quarter of 2011, Boeing reported total revenue of $17.7 billion, up 4% from $17.0 billion in the same quarter preceding year. Operating margins improved to 9.7% from 8.2% in the same period previous year. For the quarter, earnings were $1.1 billion, or $1.46 per share, over $837 million, or $1.12 per share during third quarter 2010. Cash and marketable securities improved to $9.2 billion. vs. the previous quarter's $8.8 billion. Boeing's backlog rose to $332 billion at the end of the quarter from $323 billion seen at the beginning. Net orders during the quarter stood at $26 billion, mainly from commercial airplanes.

The company has a current dividend yield of 2.3% and a net income CAGR of 5.2%, Bloomberg reports. Returns generated in the past three months stood at 18.7%. Boeing has declared regular quarterly dividend of 44 cents per share, up 5% from the prior quarter's 42 cents per share. The dividend is payable March 2, 2012 to shareholders of record Feb. 10.

Earlier this month, FedEx signed an agreement with Boeing to buy 27 New 767-300F aircraft. During the same month, Southwest Airlines announced a firm order for 150 fuel-efficient 737 MAX airplanes. In addition, Etihad Airways and BA have ordered 10 Boeing 787-9 Dreamliners and two Boeing 777 Freighters.

Boeing has raised its 2011 earnings per share guidance to be in the range of $4.30 and $4.40 per share, indicating strong core performance. Full year 2011 revenue is pegged between $68 billion and $70 billion.

2. Honeywell International ( HON) is a diversified technology and manufacturing company operating in segments such as sensing and security, aerospace, turbochargers, automotive products, specialty materials, process technology for refining and petrochemicals, electronic and advanced materials, and energy-efficient products and solutions.

Of the 25 analysts covering the stock, 72% recommend buying and 28% suggest a hold. There are no sell ratings on the company. The stock's average 12-month price target is $63.0, which is 15.9% higher than the current price, as per a Bloomberg consensus.

The company reported net income of $862 million for 2011 third quarter, or $1.1 per diluted hare, on revenue of $9,298 million, as against $598 million, or 77 cents per diluted share, on revenue of $8,139 million, in the same quarter prior year. Revenue from the aerospace, automation and control systems, transportation, and specialty materials segments rose 8%, 14%, 22% and 25% respectively, from the same quarter earlier year.

Honeywell has a current dividend yield of 2.4% and a net income CAGR of 4.3%, according to data compiled by Bloomberg. In the past three months, the company generated 21.1% in returns. The company has increased its annual dividend by 12% to $1.49 from $1.33 per common share. The dividend was paid on Dec. 9 to shareholders of record Nov. 18.

Earlier this month, Honeywell awarded a 15-year, $88.6 million contract to completely overhaul the technology controlling the massive wastewater treatment system in the city of Los Angeles. The company has signed an agreement with J.R. Simplot to build a facility to produce Honeywell's Sulf-N 26, a fertilizer with all the agronomic benefits of traditional nitrate-based fertilizers, but with very low explosive potential.

The company projects its 2011 revenue in the range of $36.5 billion to $36.7 billion, up ~13% form 2010, and EPS of $4.0 to $4.05, increasing 33% to 35%. For full year 2012, revenue is estimated between $37.8 billion and $38.9 billion, up 4% to 7%. EPS is pegged in the range of $4.25 to $4.5, up 6% to 12%.

1. General Dynamics ( GD) provides a portfolio of products and services in combat vehicles, weapons systems and munitions; business aviation; military and commercial shipbuilding; and communications and information technology. The company operates through four business groups: Combat Systems, Aerospace, Marine Systems, and Information Systems and Technology.

Of the 26 analysts covering the stock, 69% recommend a buy and 27% suggest a hold. The stock's average 12-month price target is $76.67, about 18.2% higher than the current price, according to a Bloomberg consensus.

The company's third quarter 2011 earnings were $652 million, or $1.81 per share, on revenue of $7.9 billion, compared to $650 million, or $1.7 per share, on revenue of $8.0 billion. Operating income grew 3.3% to $998 million, while operating margin improved 60 bps to 12.7%, vs. third quarter 2010. Funded backlog for the company's business groups rose 3.7% to $45.9 billion. Total backlog, including both funded and unfunded orders, was up 2.5% to $58.5 billion.

Data from Bloomberg show a current dividend yield of 2.8% and a net income CAGR of 12.4%. The stock returned 13.2% in the past three months. Moreover, GD has declared a regular quarterly dividend of $0.47 per share on its common stock payable Feb. 10, 2012 to shareholders of record Jan. 20, 2012.

Earlier this month, General Dynamics Land Systems-Canada secured a $126 million contract from the U.S. Army TACOM Life Cycle Management Command for 73 Light Armored Vehicles (LAVs) for Foreign Military Sale (FMS). The company's C4 Systems won a $6.5 million order from the Federal Aviation Administration (FAA) for more than 1,000 CM-300/350 series ultrahigh frequency (UHF) Air Traffic Control (ATC) radios, in addition to a five-year, $47 million follow-on contract to maintain and upgrade the operational readiness of all Common Ground Stations (CGS) for the U.S. Army. Moreover, General Services Administration (GSA) has awarded the Connections II contract to General Dynamics Information Technology, a subsidiary.

>>To see these stocks in action, visit the 9 Defensive Stocks to Play portfolio on Stockpickr.

More from Investing

General Electric's Stock Price Is at a Crossroads

General Electric's Stock Price Is at a Crossroads

Adobe-Magento Deal Highlights Escalating Cloud Wars

Adobe-Magento Deal Highlights Escalating Cloud Wars

Did Trump Just Torpedo the Stock Market Again?

Did Trump Just Torpedo the Stock Market Again?

10 Questions for PayPal Ahead of Its Big Investor Day

10 Questions for PayPal Ahead of Its Big Investor Day

Lowe's Q1 Miss Emerges as Home Depot Veteran Arrives

Lowe's Q1 Miss Emerges as Home Depot Veteran Arrives