2 Defensive Stocks for a Market Downturn
Is anyone else surprised at how quickly this market sell-off took place? Over the course of three weeks, stocks retreated by a staggering amount. Granted, August has always been a seasonally weak month for equities, but this really defines a market that takes the stairs up and the elevator down.
So as we head into the annual Fed Jackson Hole Symposium next week, how should we be positioned? During times of market volatility, we should always be defensive of our capital. Even if you think the market will continue upward in the future, it doesn’t hurt to have some hedges in place. Here are a couple of defensive stocks to load up on ahead of what could be a bumpy close to August.
Axon Enterprises (NYSE: AXON)
Okay, some might actually consider this a growth stock still and that’s fair. But I think it can also be a defensive stock for your portfolio when there is weakness in sectors like tech. If you don’t know what Axon does, you’ll probably recognize it by its former name: Taser. Axon is the company that makes the Taser, as well as law enforcement technology like body cams for policemen. The company recently reported earnings and saw major growth and nearly doubled Wall Street estimates for earnings. Why is Axon so exciting? Currently, the company operates primarily in the United States where it has a near monopoly on the market. There have been talks of Axon expanding worldwide for some time now, and it recently announced that it is expanding to seven new countries by the end of 2023. For defensive stocks, I like to look at how big of an industry moat it has. It can be argued, that there is no company that has a moat as large as Axon does.
Apple (NASDAQ: AAPL)
Okay, now this one must be a joke, right? Apple? The stock that nobody wants right now because of three straight quarters of declining sales? The stock that sold off after earnings, which started this market freefall? Yes, Apple. I just finished saying that when I look for defensive companies, I want an industry moat. Believe it or not, Apple products are popular. IN fact, Apple is on the verge of releasing its iPhone 15, marking a landmark edition for the technology that changed the world. In the meantime, Apple has amassed more than 2 billion devices around the world and nearly 1 billion subscriptions for its services. Oh by the way, Apple also has nearly $200 billion in cash sitting on its balance sheet. Even though we saw higher interest rates hurt tech companies, it doesn’t really impact these companies that are holding cash in fixed-income assets like treasury bonds or money market funds. If there is one company I think everyone needs to own in their portfolio, it’s Apple. Best of all, you can get it at a discount right now!
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