Yahoo Finance Best Defensive Stocks To Buy Now
A portfolio of defensive stocks is aimed at minimising the risk of capital loss through holding carefully selected companies that are unlikely to perform poorly during tough market conditions. To do this, you need to find the important traits present in these companies, which are namely a robust balance sheet, strong liquidity and a proven ability to earn money over time. Characteristics like this are present in DuluxGroup, Whitehaven Coal and Medibank Private below.
DuluxGroup Limited (ASX:DLX)
DuluxGroup Limited manufactures, markets, sells, and distributes paints, coatings, adhesives, and garden care and other building products in Australia, New Zealand, Papua New Guinea, China, South East Asia, and the United Kingdom. Started in 1918, and headed by CEO Patrick Houlihan, the company employs 4,000 people and with the stock’s market cap sitting at AUD A$2.85B, it comes under the mid-cap category.
DLX has a robust financial position , due to high liquidity with current assets covering liabilities by 1.24x. Additionally, operating cash flow is at a good level relative to overall debt at 33.14%, making an investment in the company a safer bet if the cycle turns against you. because it’s a mid-cap stock priced at AU$2.85B , the company provides decent liquidity to investors, helping curtail the rate of decline in share price during periods of mass selling. With positive annual earnings growth of 9.50% over the past 5 years and an attractive 34.45% trailing twelve month ROE, DLX has some of the necessary characteristics to maintain value during a cyclical downfall in the market. Interested in DuluxGroup? Find out more here.
Whitehaven Coal Limited (ASX:WHC)
Whitehaven Coal Limited develops and operates coal mines in New South Wales. Formed in 1999, and now run by Paul Flynn, the company currently employs 1,500 people and has a market cap of AUD A$5.22B, putting it in the mid-cap stocks category.
The company’s capital structureis attractive that features a healthy debt level of 7.34% of equity capital. Its operating cash flow position also reached a solid 313.02% of total borrowings, giving equity investors greater confidence in the safety of their investment. Moreover, as its price gives it a AU$5.22B value on the market and a PE of 10.24x, greater liquidity is offered at a good price relative to the market, which minimises the potential for rapid share price falls in down cycles. Seeing that last year’s earnings growth continues the previous 5 years’ positive annual growth trajectory at 197.49% and 26.67% respectively, WHC has maintained attractive fundamentals for a defensive portfolio. Interested in Whitehaven Coal? Find out more here.
Medibank Private Limited (ASX:MPL)
Medibank Private Limited, an integrated healthcare company, provides private health insurance and health solutions in Australia. Established in 1976, and now run by Craig Drummond, the company size now stands at 2,859 people and with the market cap of AUD A$8.07B, it falls under the mid-cap group.
MPL has a robust financial position as there is no debt on the company’s books and no concerns around solvency or interest repayments. With Medibank Private’s market value of AU$8.07B , investors have the added benefit of solid liquidity, helping curtail the rate of decline in share price during periods of mass selling. As the past 5 years have seen annual earnings growth of 15.71% and a ROE of 26.04% in the most previous year, Medibank Private Limited contains many of the valuable traits in a defensive stock. More on Medibank Private here.
For more robust companies to add to your portfolio, explore this interactive list of defensive stocks.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
