Defensive Sectors Breakout: 3 Stocks to Buy Now for Protection

Market Overview - Defensive sectors such as Utilities, Healthcare, Energy, and Real Estate have significantly outperformed the S&P 500, contrasting with the underperformance of Technology and Semiconductor sectors [1][2] - The rotation from tech to defensive stocks began in early July, coinciding with a sell-off in technology stocks and a rally in small-cap stocks [2][3] Economic Factors - The shift in market expectations regarding the Federal Reserve's rate cut policy has driven investors to seek stocks that have been negatively impacted by higher interest rates [2][3] - As inflation eases and the labor market remains stable, the market appears to be experiencing a soft landing, prompting a rotation into defensive stocks [2] Company Highlights Avalon Bay Communities - Avalon Bay Communities is a leading REIT focused on multifamily communities in high barrier-to-entry markets across the U.S., catering to a diverse range of renters [5] - The stock has shown considerable relative strength, recently breaking out to new year-to-date highs, benefiting from falling interest rate expectations [6] - Avalon Bay has a Zacks Rank 2 (Buy) and is trading at a forward earnings multiple of 18.7x, below its 20-year median of 21.4x, with a dividend yield of 3.3% [6][7] Regeneron Pharmaceuticals - Regeneron is a prominent biotechnology company known for its innovative medicines, particularly in monoclonal antibodies, with a long-term performance compounding at an annual rate of 26.8% over the last 20 years [8][9] - The company recently beat earnings estimates by 8.9% and is experiencing strong sales from its primary drugs, Eylea and Dupixent, with significant investments planned for R&D and share repurchases [10] Public Service Enterprise Group - Public Service Enterprise Group is a major diversified energy company in the U.S., operating through subsidiaries that provide electric and gas services [11] - The stock has shown relative strength and recently reached new year-to-date highs, with a Zacks Rank 2 (Buy) reflecting positive earnings revisions [12] Investment Strategy - As investors shift towards defensive stocks, ETFs can provide a diversified approach to gain exposure to these sectors without concentrating on individual stocks [13]