Valuations are starting to finally look like they’re under pressure. Growth stocks have taken a hit of late amid rising inflation and interest rate concerns.
Accordingly, investors may be enticed to look at more defensive options in the market. Such a move is prudent right now.
In this context, here are two stocks that I believe will fit a defensive investor’s portfolio well.
What’s more defensive than gold?
Gold has been a long-term portfolio hedge for generations. Whether it’s physical bouillon, gold futures, or gold miners, investors seek gold exposure in times of rising inflation and economic concern.
Accordingly, now is a great time to check out the best gold miners for exposure. In this context, Barrick Gold (TSX:ABX)(NYSE:GOLD) remains one of the best defensive options in the market today. It appears that analysts and the broader market agree.
Gold has begun to take off once again following a brief period of consolidation since last summer. I think we could be poised for yet another leg up in the gold space. Rising inflation concerns are real and could take gold prices on a nice ride.
For investors in Barrick, analysts seem to like the company’s move to create more operational efficiencies. The company’s much-improved balance sheet is another focal point analysts suggest investors hone in on.
Overall, I think this gold miner’s diverse operations and high-quality portfolio of gold reserves make it an excellent hedge.
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Fortis (TSX:FTS)(NYSE:FTS) is undoubtedly one of the best Dividend Aristocrats on the TSX these days. The company’s unmatched record of providing dividend increases for nearly 50 years coupled with strong core fundamentals make this an attractive defensive play for investors.
Despite recent stock price appreciation, Fortis is offering a decent 3.7% dividend yield to its stakeholders. Indeed, this yield is impressive, particularly in comparison to bond yields today.
In terms of capital preservation, Fortis ought to remain atop investors’ buy lists today. The company’s diversified, regulated cash flows offer a level of defensiveness that’s hard to find in the market today. Thus, earnings predictability and long-term steady growth are what Fortis provides in spades. These traits are undervalued in today’s market.
The reliable core business models and steady cash flows of these two companies render them an interesting defensive play in the market. Judging by the current momentum of these stocks, investors could benefit should they increase portfolio exposure to these defensive stocks.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends FORTIS INC.