3 Defensive Stocks to Watch as Trade Tensions Resurface: GILD, JNJ, KR

Resurfaced tensions between the U.S. and China caught the market off guard in Friday’s trading session, with the S&P 500 and Nasdaq falling over 2% on news that President Trump plans to impose an additional 100% tariff on Chinese goods starting November 1^st.

Notably, President Trump stated the move was prompted by China taking an “extraordinarily aggressive” position in what had been ongoing trade talks by announcing new export controls on the U.S. that will take effect next month.

With investors being on edge as the world’s two largest economies go head-to-head again, seeking out stocks that can offer defensive safety in the portfolio may be necessary.

Top Performing Medical Stocks

The medical sector had been at the forefront of defensive positions earlier in the year when President Trump’s Liberation Day Tariffs rocked the broader market, with Gilead Sciences GILD and Johnson & Johnson JNJ being able to hold onto some of these exhilarating gains.

GILD and JNJ shares are hovering near their 52-week highs and are still up more than +25% year to date, respectively. Enthusiasm for their drug pipelines has been magnified by increased probability, as Gilead Sciences has a stronghold in developing treatments for HIV and liver diseases, while Johnson & Johnson has a robust portfolio across immunology, oncology, neuroscience, and other therapeutic areas.

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Also attracting investors have been Gilead Sciences and Johnson & Johnson’s respectable dividends, which are both around 2.7%, topping the Zacks Medical sector’s average of 1.47% and the S&P 500’s average of 1.1%.

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Kroger’s Value as a Retail Grocery Leader

As one of the largest grocery chains in the U.S., investors have shown a tendency to flock to Kroger’s KR stock for defensive safety as well. While Kroger stock lost some of its YTD gains when tariff concerns subsided, KR is still up a respectable +13% in 2025.

Amid a resurgence in market volatility, Kroger’s value may take center stage with KR trading at a reasonable 14X forward earnings multiple and well under the preferred level of less than 2X sales.

See also <html> <head> <title>Exploring the Resilience of Building Products Stocks</title> </head> <body> <h2>Embracing Industry Momentum</h2> <p>As the waves of government infrastructure spending roll in, firms within the Zacks Building Products - Miscellaneous sector are gearing up for a tide of opportunities and challenges. These companies, such as Advanced Drainage Systems, Inc., Armstrong World Industries, Inc., Frontdoor, Inc., Construction Partners, Inc., and Latham Group, Inc., are set to navigate through potential hurdles like macroeconomic uncertainties, fluctuating rates, and escalating raw material costs.</p> <h3>Delving into the Industry Dynamics</h3> <p>The Zacks Building Products - Miscellaneous industry encompasses manufacturers, designers, and distributors of an array of home improvement and building materials. From ceiling systems to ground-mounted solar racking, these companies play a crucial role in reviving the nation's infrastructure, especially in sectors like wastewater, water, energy, and mining. Moreover, they cater to a diverse clientele, including construction firms, industrial units, utilities, municipalities, homeowners, and governmental bodies.</p> <h3>Shaping the Future Landscape</h3> <p>Analyzed within the realm of the industry are three pivotal trends that herald a transformative era for building products. As the U.S. administration embarks on massive infrastructural investments, the sector is poised to benefit from renewed vigor in housing market conditions. Operational efficiencies, innovative product offerings, and strategic acquisitions are driving growth, albeit against a backdrop of rising costs and inflationary pressures.</p> <h3>Insights into Industry Health</h3> <p>The Zacks Building Products - Miscellaneous industry, currently ranked at #57, occupies a favorable position among over 250 Zacks industries. The robust earnings outlook of constituent companies has propelled this sector into the top echelons of performance. Analysts projecting an upward trajectory for 2024 earnings cement confidence in the industry's growth trajectory.</p> <h2>Unveiling Market Performance Metrics</h2> <h3>Marking Milestones in Price Performance</h3> <p>In a demonstration of resilience, the Zacks Building Products - Miscellaneous industry has outpaced the Zacks S&P 500 Composite index and kept pace with the broader Construction sector over the past year. A solid 32% surge underscores the industry's mettle, mirroring the sector's overall growth.</p> <h3>Valuation Insights</h3> <p>Aligned with current market dynamics, the industry's forward 12-month price to earnings ratio stands at a modest 16.7X, offering a favorable comparison to the S&P 500's 21.6X. Despite fluctuating between 11.1X and 20.1X over the past five years, the industry's median valuation paints a picture of stability amidst market volatility.</p> <h2>Promising Investment Opportunities</h2> <h3>Handpicked Stocks for Consideration</h3> <p>Exploring the roster of building product stocks, we spotlight five top performers carrying a Zacks Rank #1 (Strong Buy) or 2 (Buy).</p> <p>Frontdoor, headquartered in Memphis, TN, stands out among its peers for its innovative approach and robust strategic initiatives. The company's commitment to enhancing brand value and technological prowess highlights a forward-looking vision, bolstering investor interest.</p> <p>FTDR, a Zacks Rank #1 stock, has witnessed a notable 49% appreciation over the past year. With an 8.3% upward revision in 2024 earnings estimates and an anticipated growth rate of 18.7%, the company's financial outlook is marked by promising prospects.</p> <p>As these building product companies navigate the ebbs and flows of the market, their steadfast resolve and strategic acumen position them for sustained success in a dynamic economic landscape.</p> </body></html><!DOCTYPE html><html lang="en"><head> <meta charset="UTF-8"> <meta http-equiv="X-UA-Compatible" content="IE=edge"> <meta name="viewport" content="width=device-width, initial-scale=1.0"> <title>An In-depth Look at High-Flyers in the Construction Industry</title></head><body> An In-depth Look at High-Flyers in the Construction Industry

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Seeing steady top and bottom line expansion, Kroger stock stands out with an overall “A” VGM Zacks Style Scores grade for Value, Growth, and Momentum. Plus, Kroger also offers an annual dividend yield of over 2%.

Even better, Kroger’s 28% payout ratio suggests there is plenty of room to raise its dividend in the future, with KR having an impressive annualized dividend growth rate of 15.24% in the last five years.

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Bottom Line

Building their reputations as viable defensive investments, Gilead Sciences, Johnson & Johnson, and Kroger stock all land a Zacks Rank #3 (Hold) at the moment. That said, these stocks will likely attract investors if markets continue to pull back, as their operations are deemed essential regardless of economic uncertainty.

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This article originally published on Zacks Investment Research (zacks.com).

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