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Jobless Claims Rise First Time Since March: 5 Defensive Picks

On Jul 23, the DOW, the S&P 500 and the Nasdaq closed 1.3%, 1.2% and 2.3% lower on an unprecedented rise in jobless claims after March 2020.

Per the Labor Department report, initial jobless claims rose to 1.416 million for the week ending Jul 18 versus the consensus estimate of 1.319 million. The reading for the week ending Jul 11 was also revised to 1.307 million from 1.300 million. Additionally, 974,999 people applied for jobless aid under a separate program. This temporary federal-relief program makes self-employed and gig workers eligible for jobless claims for the first time.

The rise in number of Americans seeking unemployment benefits reflects the deepening economic crisis caused by the coronavirus pandemic. In fact, the months of May and June witnessed sharp hiring gains as the economy started to reopen, only to be stalled by the spike in new cases.

Jobless claims rose across the states of Louisiana, California and Tennessee on the coronavirus resurgence. This forced administrations to put the reopening plans on hold and impose strict orders leading to the closure of some businesses for the second time and tighter restrictions on citizens.

So far, the United States has witnessed nearly 4.2 million coronavirus cases and the country has been reporting a staggering number of new cases per day. The spike is constantly building pressure on the job market as businesses stay closed and hiring is out of consideration.

5 Defensive Stocks to Buy

Investing in defensive stocks like utilities, healthcare and consumer staples can be beneficial in the current market scenario. These stocks provide stable returns regardless of market gyrations, leaving demand for these constant even during a pandemic or volatile geopolitical conditions. Defensive companies deal with essential items like food, medicines, water and electricity, and their requirements remain unchanged, even when the virus forces people to stay indoors.

The spike in unemployment claims and looming coronavirus fears have made markets volatile. Given the current market scenario, investors can consider defensive stocks that return well even during economic downturns. Here are our top five defensive stock picks --

Turning Point Brands, Inc. TPB manufactures and markets tobacco and other related products. The company’s expected earnings growth rate for the current year is 12.9% compared with the Zacks Tobacco industry’s estimated earnings growth of 0.7%.

The Zacks Consensus Estimate for its current-year earnings has climbed 11.1% over the past 60 days. Turning Point Brands sports a Zacks Rank #1(Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Medifast, Inc. MED manufactures and distributes weight loss, weight management, healthy living products, and other consumable health and nutritional products. The company’s expected earnings growth rate for the current year is nearly 19% compared with the Zacks Food - Miscellaneous industry’s estimated earnings growth of 5.3%. The Zacks Consensus Estimate for its current-year earnings has climbed 4.4% over the past 60 days. Medifast flaunts a Zacks Rank #1.

Emergent BioSolutions Inc. EBS is a lifescience company that focuses on the provision of specialty products for civilian and military population. The company’s expected earnings growth rate for the current year is 45.4% compared with the Zacks Medical - Biomedical and Genetics industry’s estimated earnings growth of 11.9%. The Zacks Consensus Estimate for its current-year earnings has climbed 34.7% over the past 60 days. Emergent BioSolutions sports a Zacks Rank #1.

Thermo Fisher Scientific Inc. TMO provides analytical and other instruments, laboratory equipment, software, consumables, reagents, instrument systems, chemicals, supplies, and services. The company’s expected earnings growth rate for the current quarter is 3.7% against the Zacks Medical - Instruments industry’s estimated earnings decline of 37.4%. The Zacks Consensus Estimate for its current-year earnings has climbed 7.6% over the past 60 days. Thermo Fisher flaunts a Zacks Rank #1.

Sempra Energy SRE operates as an energy-services holding company. The company’s expected earnings growth rate for the current year is 9.7% against the Zacks Utility - Gas Distribution industry’s estimated earnings decline of 0.4%. The Zacks Consensus Estimate for its current-year earnings has climbed 2.9% over the past 60 days. Sempra Energy sports a Zacks Rank #2 (Buy).

Zacks’ Single Best Pick to Double

From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, SherazMian hand-picks one to have the most explosive upside of all.

With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.

The sky’s the limit for this emerging tech giant. And the earlier you get in, the greater your potential gain.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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