Goldman Sachs Identifies 23 Defensive Stocks for Volatility Protection

Key points

• Goldman Sachs strategist Ben Snider highlighted 23 Russell 1000 stocks as defensive options with quality-growth traits.
• The recommended stocks are primarily from the Health Care and Consumer Staples sectors, known for lower volatility.
• Key criteria for selection include high free-cash-flow yields and defensive characteristics to protect against downside risk.
• Notable names on the list include Abbott Laboratories (ABT), CVS Health (CVS), Merck (MRK), and The Kroger Co. (KR).
• The recommendations come amid concerns over a deteriorating growth outlook, suggesting a shift toward stability in portfolios.

Background

This move follows recent market volatility where defensive assets like retail giants faced valuation squeezes despite strong operations. Additionally, Goldman Sachs recently shifted to an overweight stance on both stocks and bonds, signaling a broader realignment in portfolio strategies amidst rising yields and inflation uncertainty.

Why it matters

Investors are increasingly seeking stability in the face of potential economic slowdowns. By identifying stocks that combine defensive traits with growth potential, Goldman Sachs provides a strategy to mitigate downside risk while maintaining exposure to quality companies. This approach is particularly relevant as market leaders face scrutiny and volatility rises in sectors like technology and AI.

What to watch

Investors may look to adjust their portfolios to include these defensive stocks, especially if the growth outlook continues to deteriorate. Monitoring the performance of these stocks against broader market indices will be crucial in assessing the effectiveness of this defensive strategy.