3 defensive stocks with analyst upgrades

Defensive stocks are a key part of the market that can provide significant portfolio gains. While they are often not considered to be the market outperformers, this is certainly not always the case. Defensive stocks perform better in bear markets and economic downturns. in the case of Consumer staple stocksThe essential nature of their products adds stability to their revenue when times are tough. Below, I’ll detail three important consumer staples stocks that Wall Street analysts are upgrading as 2025 gets into full swing. All return figures are close to January 14.

Walmart: America’s retail king has upgraded again

An excellent American defensive stock to start the new year upgrade is Walmart NYSE: WMTAs analysts at Wells Fargo and Barclays reiterated overweight ratings and raised their price targets. Wells Fargo raised its target to $100 from $96, while Barclays raised its target to $98 from $90. The average of these two targets suggests a roughly 9% upside in Walmart shares.

Despite this modest volume increase, it’s important to note that Walmart was one of the most upgraded stocks of 2024. The company’s targets increased throughout the year, largely in tandem with the company’s rising share price. Over the past year, Walmart stock has appreciated nearly 71%. While the company’s dividend yield is nothing special at just 0.9%, the data suggests the stock could provide significant gains in a downturn. Walmart’s five-year monthly beta is 0.52. It shows that when the overall market goes up or down 10% in a month, Wal-Mart goes up an average of 5.2% that month.

Overall, Walmart impressed during 2024 as it released its financial results. The company slightly beat estimates on sales in each quarter. Its significant beats on adjusted earnings per share (EPS) each quarter were particularly impressive. The company beat estimates by 14% in the three months ended April 30. The company’s e-commerce business has been a significant source of growth. Comparative US e-commerce sales 22% growth in the last quarter and accounted for 55% of the company’s overall US comparable sales growth. E-commerce business still has significant room to grow, as it is still a fraction of the size Amazon.com NASDAQ: AMZN.

Coca-Cola: Price targets show bubbling upside

Another one of the most popular brands in the United States, Coca-Cola NYSE: KOOne of the defensive stocks Analysts are upgrading 2025 to begin. Analysts at TD Cowen upgraded the stock from a hold to a buy, with a $75 price target on it.

Notably, Wells Fargo and Piper Sandler also issued ratings. Wells Fargo Lowers Its Price Target; However, it maintained its overweight rating on the stock. Piper Sandler initiated coverage on the name, set a $74 price target and gave it an overweight rating.

These targets average out to $73 per share. Based on this, the consumer staples stocks rose by around 18%. That’s not too bad for a very mature firm that offers a solid dividend and stability during a potential downturn. The company’s dividend yield is 3.1%, well above the S&P 500 index, which has a dividend yield of around 1.2%. The company also maintains a low five-year monthly beta of 0.62.

McCormick: TD Cowen warmed its rating

The last stock lacks the name recognition of the other two, but those who frequent their spice drawers know it well. McCormick & Company, Incorporated NYSE: MKC received one Rating upgrade and price target increase From TD Cowen. The firm issued a buy rating on the stock and raised its price target from $86 to $90. The target means the company’s shares could rise by more than 25%.

The company offers a solid dividend yield of 2.5%, finding itself between the other two firms. The company’s five-year monthly beta is notably higher than the other two at 0.76. While this means that the stock may fall further, it also means that it may rise in an overall market bull run.

The spice maker’s shares have appreciated moderately over the past year, delivering a total return of 11%. The company strongly beat its adjusted EPS estimates in every 2024 quarter, contributing to its growth. McCormick sees hot sauces and spicy seasonings as strong growth drivers. It refers to these as “summer” products and projects they will do Growing three times faster than “non-heat” products.

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