The big news recently concerned the August jobs report, which came in below expectations. The softness in the jobs market spooked investors, and market watchers are now looking to the Fed’s next meeting, and an anticipated cut in the key funds rate.
So, where does the stock market go from here? The overall trend of the past year remains bullish, and investors aren’t fleeing the market – yet. But the question remains, where should investors start putting their money? A recent report from Morgan Stanley’s chief US equity strategist, Mike Wilson, suggests buying stocks that show a combination of defensive positions and overall quality.
“Until the bond market starts to believe the Fed is no longer behind the curve (spread between 2-year yield and Fed Funds narrows), growth data reverses course and improves materially or additional policy stimulus is introduced, it will be difficult for equity markets to trade with a more risk on tone, in our view,” Wilson said. “This means valuations are likely to remain challenged for the overall index… In such an environment, quality + defensive equities should continue to show outperformance.”
The stock analysts at Morgan Stanley are following this lead, and pointing out solid defensive plays that should command investor attention going forward. We’ve used the database at TipRanks to look at the broader picture on two of these quality defensive stocks, so let’s take a dive into the details.
Johnson Controls (JCI)
We’ll start with Johnson Controls, maybe not a household name but a well-known player in the world of HVAC. Johnson Controls is a Fortune 500 name, boasts a market cap of almost $46 billion, and generated $26.8 billion in its fiscal year 2023, its most recent full fiscal year. The company has built its success on the basic necessity of the core service it provides: HVAC, fire control, and safety/security systems for commercial and office spaces.
Johnson Controls has been in business since 1885, when it was founded as an electric service provider. The company’s longevity is a distinct asset – this…
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