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ATU Images/Getty Images This story is available exclusively to Insider subscribers. Become an Insider and start reading now. Goldman Sachs predicts that stocks will flatline next year due to zero earnings growth. One way to ride out a potential recession is to play it safe with defensive stocks. Morningstar compiled a list of companies they rate as “best” due to their competitive advantages. On Wednesday, the Federal Reserve announced that it would be raising interest rates yet again, this time by 0.5 percentage point.
The hike wasn’t as steep as the last four rounds, which were 0.75 percentage point each. However, the increase threatens to extend the liquidity crunch that has engulfed the stock market over the past year and sent investors fleeing from high-risk assets.
But whether we hit a soft or hard landing, there might not be any rip-roaring bull runs anytime soon. Goldman Sachs predicts that stocks will flatline next year due to zero earnings growth. This means investors may not have much volatility to play off of.
One way to ride out a potential recession is to play it safe. And what better way to do that than to piggyback off the brands that provide necessities such as food, beverages, and household and personal products?
Companies within the consumer defensive sector are somewhat cushioned from economic turmoil because they provide products that are in consistent demand.
Morningstar compiled a list of 19 consumer defensive stocks that they rate as being among the “best companies” to own in 2023. These brands are considered “best” because they have a competitive edge that’s either steady or increasing against other companies in their sector. They also have predictable cash flows and effectively manage and invest their money.
Finally, Morningstar took into consideration companies that have business models that can effectively navigate evolving environmental, social, and governance (ESG) issues, which adds to their longevity.
The firm says it’s confident that these stocks will produce returns that outweigh their costs for the next 20 years.
1. Walmart Inc
Markets Insider Ticker: WMT
Market Cap as of Nov. 30, 2022 ($ million): 411,046.26
2. Procter & Gamble
Markets Insider Ticker: PG
Market Cap as of Nov. 30, 2022 ($ million): 353,463.98
3. Nestle Inc
Markets Insider Ticker: NSRGY
Market Cap as of Nov. 30, 2022 ($ million): 323,595.83
4. Coca-Cola
Markets Insider Ticker: KO
Market Cap as of Nov. 30, 2022 ($ million): 275,082.29
5. PepsiCo
Markets Insider Ticker: PEP
Market Cap as of Nov. 30, 2022 ($ million): 255,578.84
6. Costco Wholesale
Markets Insider Ticker: COST
Market Cap as of Nov. 30, 2022 ($ million): 238,674.29
7. Unilever PLC
Markets Insider Ticker: UL
Market Cap as of Nov. 30, 2022 ($ million): 125,483.23
8. Anheuser-Busch InBev SA/NV
Markets Insider Ticker: BUD
Market Cap as of Nov. 30, 2022 ($ million): 114,733.45
9. Diageo PLC
Markets Insider Ticker: DEO
Market Cap as of Nov. 30, 2022 ($ million): 103,419.90
10. Mondelez International Inc
Markets Insider Ticker: MDLZ
Market Cap as of Nov. 30, 2022 ($ million): 92,329.47
11. Estée Lauder Companies Inc
Markets Insider Ticker: EL
Market Cap as of Nov. 30, 2022 ($ million): 84,132.78
12. Colgate-Palmolive Co
Markets Insider Ticker: CL
Market Cap as of Nov. 30, 2022 ($ million): 64,712.40
13. Reckitt Benckiser Group PLC
Markets Insider Ticker: RBGLY
Market Cap as of Nov. 30, 2022 ($ million): 50,851.68
14. The Hershey Co
Markets Insider Ticker: HSY
Market Cap as of Nov. 30, 2022 ($ million): 48,229.27
15. Ambev SA
Markets Insider Ticker: ABEV
Market Cap as of Nov. 30, 2022 ($ million): 47,542.49
16. Constellation Brands Inc
Markets Insider Ticker: STZ
Market Cap as of Nov. 30, 2022 ($ million): 47,463.88
17. Brown-Forman Corp
Markets Insider Ticker: BF.B
Market Cap as of Nov. 30, 2022 ($ million): 34,980.41
18. McCormick & Co Inc
Markets Insider Ticker: MKC
Market Cap as of Nov. 30, 2022 ($ million): 22,825.10
19. Clorox Co
Markets Insider Ticker: CLX
Market Cap as of Nov. 30, 2022 ($ million): 18,341.15
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