3 Defensive Stocks with Analyst Updates News ad

Defensive stocks are a key part of the market that can provide significant benefits to a portfolio. While they are often not considered market leaders, this is certainly not always the case. Defensive stocks tend to outperform in bear markets and during economic downturns. In the case of consumer staples stocks, the underlying nature of their products adds stability to their earnings during tough times. Below, I’ll take a closer look at three important consumer staples stocks that Wall Street analysts are raising their ratings on as we head into 2025. All returns and estimated growth potential are as of market close on January 14th.

Walmart: America’s retail king has reinvented itself again

The quintessential American defensive stock to start the new year with updates is Walmart. New York Stock Exchange: WMTas Wells Fargo and Barclays analysts reiterated their “outperform” ratings and raised their price targets. Wells Fargo increased its target from $96 to $100, and Barclays increased its target from $90 to $98. The average of these two targets suggests about 9% upside potential for Walmart shares.

Despite this modest upside, it’s important to note that Walmart was among the best upgraded stocks in 2024. The company’s performance targets have risen throughout the year, largely in tandem with the rise in the company’s share price. Walmart shares are up nearly 71% over the past year. While the company’s dividend yield is nothing special at just 0.9%, data suggests the stock can provide significant benefit in a downturn. Walmart’s five-year monthly beta is 0.52. This indicates that when the overall market moves up or down 10% in one month, Walmart moves an average of 5.2% that month.

Overall, Walmart impressed throughout 2024 as it reported financial results. The company slightly beat sales forecasts each quarter. Particularly impressive was the significant beat in adjusted earnings per share (EPS) each quarter. For the three months ended April 30, the company significantly beat forecasts by more than 14%. The company’s e-commerce business has become an important source of growth. U.S. comparable e-commerce sales grew 22% last quarter and accounted for 55% of the company’s overall U.S. comparable sales growth. The e-commerce business still has significant room for growth as its size is still only a fraction of the size of Amazon.com. NASDAQ:AMZN.

Coca-Cola: Price targets show increasing upside potential

Another one of the most famous brands in the USA is Coca-Cola. NYSE: K.O.Analysts at TD Cowen upgraded the stock to Buy from Hold with a $75 price target.

It is noteworthy that Wells Fargo and Piper Sandler also published ratings. Wells Fargo did cut its price target; however, the company maintained its outperform rating on the stock market. Piper Sandler initiated coverage on the company, setting a $74 price target and giving it an “outperform” rating.

The average value of these targets is $73 per share. Based on this, the upside potential for consumer goods stocks is almost 18%. That’s not too bad for an extremely mature company that also offers a solid dividend and stability during a potential downturn. The company’s dividend yield is 3.1%, which is significantly higher than the S&P 500 index, 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 Upgrades

The latest promotion lacks the name recognition of the other two, but those who use a spice drawer probably know it well. McCormick and Company, Inc. New York Stock Exchange: MKK received a rating upgrade and price target increase from TD Cowen. The firm has a Buy rating on the stock and raised its price target to $90 from $86. The target implies that the company’s shares could rise by more than 25%.

The company offers a solid dividend yield of 2.5%, placing it in the middle of the other two companies. The company’s five-year monthly beta is notably higher than the other two, at 0.76. While this means the stock could decline further during a downturn, it also means it could rise further during an overall bullish market move.

Shares of the spice maker have risen moderately over the past year, delivering a total return of 11%. The company comfortably beat adjusted earnings per share estimates in each quarter of 2024, fueling its growth. McCormick believes hot sauce and condiments are strong growth drivers. He calls them “thermal” products and predicts they will grow three times faster than “non-thermal” products.

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