Top 5 Defensive Stocks for 2021: As we venture into an even more uncertain economic time and the most controversial presidential election of all times – adding some defensive stocks to your portfolio might be the smarter way to play this volatile market.
Here are Professional Trader, Andrew Baxter’s, top 5 defensive stocks for 2021:
Why play defense?
Despite the talk of the town in financial markets right now being momentum stocks like Afterpay and Tesla. For example, we still do have a soft spot for more defensive plays that offer good value. As we run into arguably the most controversial presidential election of all time and even more uncertain economic times.
The need for diversification into safer and more robust places makes total sense. Unlike momentum stocks, defensive stocks are much easier to value and typically perform a little more consistently which may very well suit your investment objectives as a self-funded retiree or longer-term investor. Here are host Andrew Baxter’s top 5 defensive stock picks for 2021.
Stock #1: Brambles
The first cab off the rank that made our top 5 is brambles (BXB: ASX). Let’s make this very clear, there is absolutely nothing sexy about Brambles’ business model – stuff gets moved around the world in pallets. That’s it.
Despite the mundane nature of their model, Brambles has consistently managed to pump out cash flow and also maintain a strong balance sheet. The stock now sits in heavily oversold territory, meaning it is also a great value at this point in time too.
Stock #2: Amcor
Funnily enough, Brambles and Amcor aren’t too dissimilar in what they do, albeit Amcor transports goods in paper and packaging. Now despite being in a highly competitive industry, Amcor (AMC: ASX) has managed to push profit out of the door rain, hail, or shine.
Amcor as a defensive slip into your portfolio a number of months ago would have resulted in fairly substantial gains as the stock has experienced consistent growth in its share price, to which we still see this continuing.
Stock #3: Aurizon Holdings
As the old QLD rail, Aurizon Holdings (AZJ:ASX) is probably one of the dullest businesses you could possibly think of. For anyone who thinks we smoked the front lawn before writing this, we don’t blame you – AZJ is down on its haunches as the stock has been slammed over COVID. Now, the stock is offering great value and also typically pays good dividends if that’s your thing. It doesn’t take a genius to work out that this business is super cheap right now, despite maintaining a good fundamental backing that has lasted over time which could represent a smart investment opportunity.
Stock #4: Ansell
Now, this is a stock that has had real importance throughout the COVID-19 crisis. Ansell (ANN: ASX) manufactures rubber gloves, masks, and proactive health care equipment. Which as a result has had a decent run-up in price throughout this period. Ansell definitely isn’t one of the main stocks you’d think of when creating your portfolio, however, host Andrew Baxter recommends taking a look at the stock for a defensive play given their current role in our world.
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Stock #5: Coles
Our last top 5 stock pick for 2021 needs no introduction. As more and more people have ramped up their grocery spending throughout this period. Coles (COL: ASX) has been one of the better performing stocks on the ASX and does appear to still have some legs in it. Meals and festivities at home mean more revenue for shopping centres like Coles – clearly reflected in their share price. This is a business we see thriving into the future and especially into the seasonal part of this year. Hence why it has made our top 5 picks for 2021.
A wild card: CIBR
To flip this broadcast on its head. Host Andrew Baxter offers an insight into one of the wildcards he currently holds in his portfolio. As a growth orientated, the fundamental play we draw your attention to CIBR. An ETF that holds businesses operating in the Cyber Security space.
As a sector that holds immense importance as our society transitions even further into the online world. Having your data and privacy protected is key. This is a case of trading your view. To which Baxter has a strong one on cybersecurity, hence his investment into CIBR.