3 Defensive Stocks With Analyst Upgrades – Magic Post

Defensive stocks are a major part of the market and can provide significant benefits to a portfolio. Although they are not often seen as outperformers in the market, this is certainly not always the case. Defensive stocks tend to outperform in bear markets and economic downturns. In the case of consumer staples stocks, the fundamental nature of their products adds stability to their revenues when times are tough. Below, I’ll break down three important consumer staples stocks that Wall Street analysts are upgrading as we move into 2025 in full swing. All return numbers and implied upside numbers are as of the January 14 close.

Walmart: America’s retail king is up once again

The perfect US defensive stock to start the new year with upgrades is Walmart New York Stock Exchange: WMTas analysts at Wells Fargo and Barclays reiterated their overweight ratings and increased their price targets. Wells Fargo increased its target from $96 to $100, while Barclays increased its target to $98 from $90. The average of these two targets suggests about a 9% upside for Walmart shares.

Despite this moderate amount of upside, it’s important to note that Walmart was among the most upgraded stocks of 2024. The company’s targets have been rising throughout the year, largely moving in tandem with the company’s stock price rise. Over the past year, Walmart shares have risen nearly 71%. Although the company’s dividend yield is not outstanding at just 0.9%, the data suggests that the stock could provide significant benefits in the event of a downturn. Walmart’s five-year monthly trial is 0.52. This indicates that when the overall market moves up or down 10% in one month, Walmart moves 5.2% in that month on average.

Overall, Walmart impressed throughout 2024 as it released its financial results. The company slightly beat sales estimates each quarter. Particularly impressive was the significant outperformance of adjusted earnings per share (EPS) each quarter. The company significantly beat estimates in the three months ended April 30 by more than 14%. The company’s e-commerce business has been an important source of growth. Comparable US e-commerce sales It grew by 22% in the last quarter It accounted for 55% of the company’s total comparable sales growth in the United States. The e-commerce business still has a lot of room to grow, as it is still a small fraction of Amazon.com’s size Nasdaq: AMZN.

Coca-Cola: Target prices showing bubbles to the upside

Another one of the most famous brands in the United States, Coca-Cola New York Stock Exchange: K.W.is among the defensive stocks that analysts are upgrading to start 2025. Analysts at TD Cowen upgraded the stock from Hold to Buy, setting a price target of $75.

Notably, Wells Fargo and Pepper Sandler also issued ratings. Wells Fargo lowered its price target. However, it maintained its Overweight rating on the stock. Piper Sandler initiated coverage on the name, setting a $74 price target and giving it an Overweight rating.

These targets average $73 per share. Accordingly, consumer staples stocks have an implied upside of approximately 18%. That’s not too bad for a very mature company that also provides strong earnings and stability during a potential downturn. The company’s dividend yield is 3.1%, which is much higher than the S&P 500, which has a dividend yield of about 1.2%. The company also maintains a low five-year monthly beta of 0.62.

McCormick: TD Cowen raises his rating

The latter stock lacks the name recognition of the other two stocks, but those who use their spice drawer likely know it well. McCormick & Company, Incorporated New York Stock Exchange: MKC Received a rating upgrade and target price increase from TD Cowen. The company issued a buy rating on the stock and increased its price target from $86 to $90. The target means that the company’s shares could rise by more than 25%.

The company offers a strong dividend yield of 2.5%, and finds itself in the middle of the other two companies. The company’s five-year monthly beta is significantly higher than the other two at 0.76. Although this means that the stock may fall further in a downturn, it also means that it may rise further in an overall market uptrend.

Shares of the spice maker have risen moderately over the past year, providing a total return of 11%. The company strongly beat adjusted EPS estimates in every quarter of 2024, contributing to its rise. McCormick sees hot sauce and hot seasonings as strong drivers of growth. He points out these “thermal” products and projects that they will do They grow three times faster Of the “non-thermal” products.

Before you consider McCormick & Company, Incorporated, you’ll need to hear this.

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