Stock Analysis & Ideas

4 Defensive Stocks to Shield Your Portfolio

During the heady days of the liquidity-driven appreciation of the capital markets due to the onset of the pandemic, any stock that investors touched turned to gold. Swift gains became a prevalent trend of equity markets across the world.

However, the times have changed now and headwinds like back-breaking inflation, increasing interest rates, geopolitical tensions and supply-chain issues can be seen hurting the capital markets.

In such a scenario, defensive sectors like Consumer Staples and Healthcare give an opportunity to investors to protect and grow their capital.

Despite the fact that the S&P 500 has declined over 8% so far this year, the Healthcare Index lost only 1.7%. Impressively, the Consumer Staples Index has grown 2.5%.

By using the TipRanks Stock Screener tool, we have selected two stocks each under the Healthcare and Consumer Staples sectors that have a market capitalization of $10 billion to $200 billion, a Smart Score of 8 or 9, and carry a Strong Buy consensus rating. Let’s have a look at them.

Exact Sciences Corp. (NASDAQ: EXAS)

The first stock from the Healthcare sector is Exact Sciences, a molecular diagnostics company specializing in the detection of early-stage cancer. It also prepares screening and precision oncological tests for cancer.

The company recently reported mixed fourth-quarter 2021 results, as it missed earnings but surpassed revenue estimates. Revenues for the quarter stood at $473.8 million, up 2% year-over-year, above the consensus estimate of $449 million.

Although its loss per share narrowed to $1.28 from $2.67 a year ago, it surpassed analysts’ loss estimate of $1.04 per share. For 2022, the company forecasts revenues in the range of $1.975 billion-$2.027 billion against the consensus estimate of $1.99 billion.

Consensus among analysts is a Strong Buy based on nine Buys and two Holds. EXAS’ average price target of $105.91 implies upside potential of 56.1% from current levels. Shares have declined 46.8% over the past year.

BioMarin Pharmaceutical Inc. (NASDAQ: BMRN)

The second stock from our healthcare picks is BioMarin Pharmaceutical, a biotechnology company based out of San Rafael, CA. BioMarin’s core business is focused on enzyme replacement therapies.

Recently, the company reported fourth-quarter 2021 revenues of $449.8 million, up 1% year-over-year, above the consensus estimate of $442.09 million.

The company reported a loss of $0.32 per share, in line with the consensus estimate. BMRN had posted earnings of $0.12 per share in the same quarter last year.

For 2022, the company sees revenue in the range of $2.05-$2.15 billion versus the consensus estimate of $2.14 billion.

Recently, Morgan Stanley analyst Matthew Harrison reiterated a Hold rating on the stock. The analyst, however, raised the price target from $90 to $96, which implies upside potential of 18.3% from current levels.

Consensus among analysts is a Strong Buy based on 10 Buys and three Holds. BMRN’s average price target of $112 implies upside potential of 38% from current levels. Shares have declined 2.1% over the past year.

The TJX Companies, Inc. (NYSE: TJX)

Our first pick under the Consumer Staples sector is TJX Companies, which is an off-price department store corporation. It operates in nine countries and has over 4,557 discount stores.

In its fiscal fourth-quarter 2022 results, the company posted revenues of $13.9 billion, up 26.6% year-over-year but below the consensus estimate of $14.25 billion. Earnings per share (EPS) for the quarter stood at $0.78, up 189% from the same quarter last year. However, the figure failed to surpass the consensus estimate of $0.91 per share.

Recently, Barclays analyst Adrienne Yih reiterated a Buy rating on the stock. The analyst, however, raised the price target from $82 to $85, which implies upside potential of 36.1% from current levels.

According to the analyst, improved stock inventory levels can lead to increased sales and market share for the company.

Consensus among analysts is a Strong Buy based on 14 Buys and three Holds. TJX’s average price target of $77.65 implies upside potential of 24.4% from current levels. Shares have declined 9.5% over the past year.

Burlington Stores, Inc. (NYSE: BURL)

Our second pick from the Consumer Staples sector is another off-price retailer, Burlington Stores. Based out of Burlington, NJ, the company operates 740 stores in 40 states and Puerto Rico.

In its fourth-quarter 2021 results, the company reported revenues of $2.6 billion, denoting a year-over-year rise of 14.3%. However, the figure failed to surpass the consensus estimate of $2.79 billion. EPS for the quarter stood at $2.53, up 3.7% from the prior year but below the consensus estimate of $3.27 per share.

Recently, Wells Fargo analyst Ike Boruchow reiterated a Buy rating on the stock. The analyst, however, lowered the price target from $275 to $235, which implies upside potential of 7.3% from current levels.

Overall, the Street has a Strong Buy consensus based on 16 Buys, three Holds and one Sell. BURL’s average price target of $262.58 implies upside potential of 20% from current levels. Shares have declined 31.8% over the past year.

Key Takeaways

As the prevailing uncertainties in the global economic landscape are not expected to abate soon, investors may find the aforementioned stocks a safe bet as they reflect an average upside of almost 35%.

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