2 Defensive Stocks to Consider With Market Conditions Turning More Bearish

NYSE: NOC | Northrop Grumman Corp. News, Ratings, and Charts

NOC – The stock market has given back the bulk of its gains following a stronger than expected inflation print. Amid these challenging circumstances, investors should consider high-quality, defensive stocks like Elevance Health (ELV) and Northrop Grumman (NOC).

The stock market has now given back the bulk of its 18% rally from the mid-June lows. The catalyst for the move higher from mid-June was the possibility of inflation numbers rolling over which would be the harbinger of the Fed slowing down on its rate hikes and the unwind of extreme readings in short interest and bearish sentiment. A contributing factor was the resilience of corporate earnings and economic data despite some adverse conditions.

However, these conditions are going to get even more difficult after the latest inflation data which will likely push rates higher and for a longer period of time. The Fed wants to see inflation decline in a meaningful and sequential manner before it considers relaxing its current hawkish stance. There was some inkling that this could be happening based on July’s data and continued weakness in gasoline prices, freight rates, and vehicle prices in August.

These were more than offset by increases in other components. And, the Fed’s preferred measure – core CPI – actually accelerated on a monthly level. This means the bullish tailwind of falling inflation is weakening, while the bearish headwind of a hawkish Fed is getting stronger. Amid these challenging conditions, here are 2 defensive stocks that investors should consider:

Elevance Health (ELV)

ELV is a managed care company, providing medical benefits to roughly 44 million members. The company offers employer, individual, and government-sponsored coverage plans. It is also the largest single provider of Blue Cross Blue Shield branded coverage. This sector has also been particularly strong due to a low unemployment rate which means that the company has seen strong growth in enrollees. 

Further, the pandemic was a boost to its bottom line as less people were going to the doctor and undergoing procedures. Therefore, the company’s payout ratio declined. Many analysts had been expecting an above-average reading as the economy normalized, but so far this has simply returned to pre-pandemic levels.

Another reason to like managed care stocks is their pricing power as healthcare spending tends to rise at a faster pace than inflation. And, they tend to be less affected by economic slowdowns. Currently, the company is seeing growth from its Medicare Advantage plans and virtual care services. 

Last year, the company had $25.98 in EPS and $136.9 billion in revenue. This year, analysts are forecasting $28.61 in EPS and $153.8 billion in revenue, increases of 10.1% and 12.3%, respectively. And, they see more growth in 2023 – 13.3% for EPS and 5.2% for revenue.

With these attributes, it’s not surprising that ELV has an overall grade of A, which translates into a Strong Buy rating in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting. 

It also evaluates stocks by select factors to generate component grades to give investors more insight. ELV has a B for Sentiment as 14 out of 17 Wall Street analysts covering the stock have a Buy rating with a consensus price target implying 13% upside. ELV is ranked #1 in the B-rated Medical – Health Insurance industry. For more top stocks in this industry, click here.

Northrop Grumman (NOC)

NOC is one of the largest aerospace and defense contractors in the world with a $71 billion market cap. The company operates through 4 segments: Aeronautics Systems; Defense Systems; Mission Systems; and Space Systems. Its largest source of revenues is providing aircraft systems with tactical intelligence, weapon and mission systems for the military, radar, electro-optical/infrared, and acoustic sensors.

NOC certainly fits the criteria of a defensive stock as the company has consistently grown its revenues, earnings, free cash flow, and dividends. Over the last decade, each of these metrics is higher by 138%, 273%, 174%, and 207%. This is because defense spending continues to grow on an aggregate level, and NOC is one of the premier stocks in the sector.

Despite being a defensive stock, NOC does offer growth upside given its exposure to the space industry. Its customers include NASA and telecommunications companies as it provides services related to space logistics, satellite launches and maintenance, space security, and propulsion systems. Overall, the space industry is expected to reach a size of $1 trillion by 2040 and grow at a double-digit rate. 

NOC’s promising prospects are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. Given that the majority of Wall Street analysts covering the stock have a Buy rating and a history of dividend hikes, it’s not surprising that it has a B grade for Quality and Stability. Click here to see NOC’s complete POWR Ratings. 

9 “MUST OWN” Growth Stocks

What makes them “MUST OWN“?

All 9 picks have strong fundamentals and are experiencing tremendous momentum. They also contain a winning blend of growth and value attributes that generates a catalyst for serious outperformance.

Even more important, each recently earned a Buy rating from our coveted POWR Ratings system where the A rated stocks have gained +31.10% a year.

Click below now to see these top performing stocks with exciting growth prospects:

9 “MUST OWN” Growth Stocks


NOC shares closed at $485.20 on Friday, up $0.12 (+0.02%). Year-to-date, NOC has gained 26.76%, versus a -18.22% rise in the benchmark S&P 500 index during the same period.


About the Author: Jaimini Desai


Jaimini Desai has been a financial writer and reporter for nearly a decade. His goal is to help readers identify risks and opportunities in the markets. He is the Chief Growth Strategist for StockNews.com and the editor of the POWR Growth and POWR Stocks Under $10 newsletters. Learn more about Jaimini’s background, along with links to his most recent articles. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
NOCGet RatingGet RatingGet Rating
ELVGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

Updated: Bear Market Game Plan!

Please do not assume this bear market is over. History provides many lessons on how bear markets work and thus why the S&P 500 (SPY) could easily fall another 20% or more from current levels. That is the past. Now we need to focus on the future like how low the stocks will go...and the best trades to stay on the right side of the market action. All that and more is in Steve Reitmeister updated “Bear Market Game Plan”. Read on below for more...

:  |  News, Ratings, and Charts

2 Stocks Under $50 Worth Snapping up Right Now

With the market volatility and odds of recession perpetually increasing with every interest rate hike by the Federal Reserve, investors would be advised to load up on attractively priced stocks of businesses with robust demand and stable growth trajectory. Hence, fundamentally sound stocks Kroger (KR) and APA (APA), currently trading under $50, could be ideal investments. Keep reading…

:  |  News, Ratings, and Charts

3 Stocks You'll Want to Leave out of Your Retirement Portfolio

The stock market is experiencing wild swings amid the consecutive Federal rate hikes and deteriorating investor sentiments. Moreover, the aggressive rate hikes are raising recession concerns. Therefore, fundamentally weak stocks Uber Technologies (UBER), Workhorse Group (WKHS), and AppHarvest (APPH) might be best avoided for your retirement portfolio. Also, these stocks do not pay dividends. Read on…

:  |  News, Ratings, and Charts

The Worst Stock to Buy During Times of High Inflation

Rent the Runway (RENT) is slated to cut its workforce by 24% in the face of declining consumer spending amid soaring prices. Its subscriber count dropped in the last quarter. The stock has lost more than 70% year-to-date. Given the stubbornly high inflation, RENT might be best avoided. Keep reading…

:  |  News, Ratings, and Charts

3 Stocks You'll Want to Leave out of Your Retirement Portfolio

The stock market is experiencing wild swings amid the consecutive Federal rate hikes and deteriorating investor sentiments. Moreover, the aggressive rate hikes are raising recession concerns. Therefore, fundamentally weak stocks Uber Technologies (UBER), Workhorse Group (WKHS), and AppHarvest (APPH) might be best avoided for your retirement portfolio. Also, these stocks do not pay dividends. Read on…

Read More Stories

More Northrop Grumman Corp. (NOC) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All NOC News