3 defensive growth stocks
These blue chip consumer and info tech names offer stable returns for cautious investors.
By John Persinos, Personal Finance
Against the current economic and fiscal backdrop, the most prudent course of action is to focus on large-cap consumer and information technology stocks that are less vulnerable to unexpected political shocks and the market's ups-and-downs.
However, investors worried about the contractionary effects of "sequestration" don't have to sit on the sidelines. They can take a defensive stance and still enjoy growth.
Our latest "Best Buy" is Home Depot (HD), from our Growth Portfolio's consumer discretionary sleeve. The stock is a timely play on rising home prices and the pickup in construction activity.
Home Depot's stock has risen nearly 50% over the past year, but there's still plenty of upside left as the broader recovery gets underway and consumers gain confidence.
Among our growth consumer staples picks, Philip Morris International (PM) should steer a steady course this year. If any negative surprises undermine the current rally -- such as particularly harsh consequences of budget sequestration -- this profitable maker of addictive consumer "vices" should fare just fine.
For full-year 2012, the company's earnings grew 2.8% to $7.9 billion and revenue increased nearly 1% to $31.4 billion. Total shipments of the company's cigarettes grew by 1% to $927 billion.
About 70% of the company's sales stem from emerging markets, with 41% from China alone. China's growth rate is expected to pick up steam again this year -- and with it, the country's appetite for Western brands such as Philip Morris' iconic red Marlboro label.
In technology, growth stalwart Qualcomm (QCOM) continues to demonstrate resiliency, come what may.
Enjoying surging demand for its chips, Qualcomm recently announced it would increase its quarterly dividend from 25 cents to 35 cents, a healthy increase of 40%. The move pushes the company's estimated 2013 dividend yield to approximately 2%.
In tandem with the distribution hike, Qualcomm also announced it would soon boost the target of its $4 billion stock buyback program to $5 billion.
As consumer spending picks up in the U.S. and around the world, the smartphone craze will continue apace, boosting Qualcomm's fortunes for the rest of this year and beyond.
Qualcomm's books are flush with $28.3 billion in cash and equivalents. The company also projects earnings growth this year in excess of 20%.
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