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Core Insights - Gold prices remain steady above $5,000 per ounce amid geopolitical and economic risks, with predictions of potential increases to $6,000 due to a weaker dollar [1] - Consumer staples are highlighted as a defensive sector that can protect capital during market volatility, offering steady dividend income and reliable revenue [1] Consumer Staples Sector - Consumer staples are considered a 'safe' sector as they sell essential goods, leading to predictable revenue streams [1] - These companies typically have steady dividend income, reliable earnings, and the ability to pass on rising costs to consumers [1] - Low beta characteristics of consumer staples stocks make them less volatile compared to the broader market, appealing to institutional investors during turbulent times [1] Featured Consumer Staples Stocks 1. Waste Management - Waste Management Inc. has a near-monopoly in many locations due to its extensive landfill network, making it a strong dividend payer with a 52% dividend payout rate and a 22-year history of annual increases [1] - The stock is experiencing a bullish trend, having surpassed the 200-day simple moving average for the first time since last September [1] 2. British American Tobacco - British American Tobacco plc has shifted towards smokeless products, maintaining a dividend yield of over 5% with a 63% dividend payout ratio [1] - The stock has returned nearly 60% in the last 12 months and shows potential for further gains following a period of consolidation [1] 3. Service Corporation International - Service Corporation International Inc. is the largest provider of funeral and cemetery services in North America, benefiting from an aging population [1] - The company has a dividend yield of 1.68% with a 36.7% payout ratio, and it has raised its dividend for 15 consecutive years [1] - The company raised its 2025 cash flow guidance to between $915 million and $950 million, supporting future payout increases [2]

Core Viewpoint - Defensive stocks are characterized by companies in sectors that provide essential goods and services, maintaining constant demand regardless of popularity trends [1] Group 1 - Defensive stocks are defined as stocks in companies that supply goods and services that are always in demand [1] - These stocks do not follow trends of popularity, indicating their stability in various market conditions [1]

Core Viewpoint - As the stock market approaches all-time highs, investors are looking for defensive options, with Coca-Cola and Pepsi being prime candidates due to their consistent performance during market corrections [1] Company Performance - Coca-Cola's return on invested capital (ROIC) is 18%, showing a positive trend towards 20% or higher, while Pepsi's ROIC is at 14%, indicating a decline in recent quarters [3][4] - Coca-Cola's fiscal 2025 earnings per share (EPS) rose 3% to $2.98, with a projected 8% increase to $3.22 for FY26, alongside a sales increase of 3% for FY25 and a projected 5% increase to $51.01 billion for FY26 [6] - Pepsi's FY25 EPS is expected to slightly dip to $8.12 but is projected to rebound by 5% to $8.55 in FY26, with sales expected to rise 2% for FY25 and 4% to $97.07 billion in FY26 [9] Valuation and Dividend Analysis - Pepsi trades at 16 times forward earnings and near 2 times forward sales, aligning with industry averages, while Coca-Cola trades at a premium of 6 times forward sales [10] - Coca-Cola offers a 3% annual dividend yield, matching the industry average, while Pepsi has a higher yield of 4%, with both companies classified as "Dividend Kings" for increasing dividends for over 50 consecutive years [12] Investment Outlook - As 2026 begins, Pepsi appears to meet more investor criteria despite Coca-Cola's stronger ROIC, with Coca-Cola potentially facing short-term weakness due to its higher valuation compared to Pepsi and its beverage peers [13]

Economic Overview - The U.S. economy presents a mixed picture with consumer activity remaining intact but shifting towards necessities rather than discretionary spending [2] - Businesses are operating under tighter margins and selective demand, creating a functional yet vulnerable economy [2] Market Sentiment - Investors are becoming more cautious as expectations for 2026 are tempered due to slower economic momentum and rising uncertainty around corporate earnings [1][3] - The market may experience increased volatility as growth becomes less predictable and earnings visibility narrows [3] Defensive Stocks - Defensive stocks are expected to perform better during uncertain periods as they cater to everyday needs, providing more predictable revenues compared to cyclical businesses [4] - These stocks can help reduce portfolio volatility while still allowing for long-term market participation [5] Company Analysis: Turning Point Brands, Inc. (TPB) - TPB has seen a 40% increase in share price over the past year, benefiting from stable consumer demand in habitual consumption categories [6] - The company is focused on maintaining brand strength while evolving its portfolio to align with consumer preferences, including expanding into modern oral nicotine products [7] - The Zacks Consensus Estimate for TPB's EPS suggests growth of 50.6% for the current fiscal year and 7.1% for the next [8] Company Analysis: Johnson & Johnson (JNJ) - JNJ benefits from steady non-discretionary healthcare demand and a diversified portfolio in pharmaceuticals and medical technologies [11] - The company emphasizes disciplined innovation, advancing its pharmaceutical pipeline and enhancing its medical technology offerings [12] - The Zacks Consensus Estimate for JNJ's EPS indicates growth of 8.9% for the current fiscal year and nearly 5.7% for the next [13] Company Analysis: NextEra Energy, Inc. (NEE) - NEE has risen 12.1% in the past year, providing essential electricity services that support predictable operations and earnings visibility [14] - The company is positioned to benefit from long-term energy infrastructure demand driven by population growth and electrification trends [15] - The Zacks Consensus Estimate for NEE's EPS suggests growth of 7.6% for the current fiscal year and 7.8% for the next [16] Conclusion - As uncertainty increases approaching 2026, investors may prefer companies like TPB, JNJ, and NEE that offer stability through essential products and services while continuing to invest in growth initiatives [17]

Core Viewpoint - The focus is on gradually increasing positions in defensive stocks that offer decent dividends, reflecting a strategy aimed at seeking relatively safe investments in an unpredictable market [1] Group 1 - The strategy involves looking for investments that are considered safe, particularly in the context of market unpredictability [1] - There is an emphasis on defensive stocks, which are typically less volatile and provide consistent dividends [1]

Core Viewpoint - Tech stocks have significantly contributed to market gains, but there is a shift towards cyclical stocks as attractive investment opportunities for the upcoming year [1] Group 1: Investment Strategy - The chief market strategist at Bank of America recommends a barbell approach, balancing investments between tech and cyclical stocks [2] - Cyclical stocks are expected to rebound as the economy recovers, with sectors like industrials, materials, and financials highlighted for potential opportunities [2] Group 2: Economic Outlook - Despite a softening labor market with rising layoffs, the job market is adjusting rather than entering a downturn, indicating resilience [3][4] - Key drivers for economic growth in 2026 include continued consumer spending, capital investments, a weaker dollar benefiting exports, and global growth [5] Group 3: Monetary Policy - Anticipated fiscal and monetary stimulus, including two Federal Reserve interest rate cuts in 2026, is expected to stimulate economic activity [6] Group 4: Market Performance - Year-to-date returns for industrials, materials, and financials sectors are 17.4%, 4.5%, and 10.8% respectively, compared to a 16.4% rise in the S&P 500 [7] - Cyclical stocks have outperformed defensive stocks, leading to a valuation premium for US cyclical stocks [8]

Core Insights - Defensive stocks like Carrefour SA are currently not attracting investor interest as markets are trading near all-time highs [1] Group 1: Market Context - The current market environment is characterized by high trading levels, which typically leads to a lack of focus on defensive stocks [1] Group 2: Investment Approach - The investment strategy discussed includes a focus on fundamental long-term perspectives, with a history of investing in REITs, preferred stocks, and high-yield bonds since 2011 [1] - The approach also incorporates combining long stock positions with covered calls and cash secured puts [1]

Core Viewpoint - The economic landscape is improving, leading to optimism for a Santa Claus rally in the stock market, particularly benefiting consumer spending and defensive stocks [1][14]. Market Outlook - Analysts are bullish on the Santa Claus rally, with predictions that the S&P 500 could exceed 7,000, supported by easing recession risks and favorable fiscal policies [2]. - Consumer confidence data indicates a mixed outlook, suggesting that discount retailers may experience higher growth during the festive season [3][4]. Key Retail Stocks TJX Companies (TJX) - TJX operates off-price retail brands like TJ Maxx and Marshalls, which are less threatened by online shopping due to their unique business model [5]. - The company plans to expand its global presence from 5,100 to at least 7,000 stores, offering significant discounts of 20% to 60% [6]. - UBS maintains a Buy rating for TJX with a price target of $172, indicating strong potential for holiday sales [7]. Walmart (WMT) - Walmart is a leading discount retailer in the U.S., with a significant presence of 10,000 stores across 19 countries, traditionally seeing increased sales during the holiday season [8][9]. - The company reported Q3 2025 earnings per share of 58 cents, exceeding expectations, and raised its net sales growth forecast to between 4.8% and 5.1% for the year [10]. Walt Disney (DIS) - Disney, while not a discount retailer, is well-positioned for price-conscious consumers due to its competitively priced entertainment offerings [11]. - The company has seen growth in its Disney+ and Hulu services, gaining 2.6 million subscribers in the last quarter, which is expected to continue as families seek entertainment during the holidays [12][13].

Core Insights - The healthcare sector has significantly outperformed the broader market, with the S&P 500 Healthcare Sector index rising over 6% since mid-October, compared to a mere 0.05% increase in the S&P 500 index [1] Group 1: Performance Drivers - Major pharmaceutical companies like Novo Nordisk and Eli Lilly have positively impacted the sector by securing a deal with the Trump administration, allowing them to avoid tariffs for three years and gain access to Medicare and Medicaid patients for their GLP-1 drugs [3] - Eli Lilly's third-quarter results exceeded Wall Street expectations, leading to a 27% increase in its share price over the past month, significantly influencing the sector's performance due to its large market cap [4] - Pfizer also entered a similar agreement with the White House, resulting in a 4% increase in its stock price over the past month [5] - AbbVie reported strong quarterly results, with a 6% increase in its stock price, and projected significant future revenues for its drugs [6] - Amgen's stock surged nearly 15% after reporting better-than-expected revenue and earnings, with its cholesterol drug showing promising results [7] Group 2: Market Sentiment - There is a noticeable flight to safety among investors, as concerns about market overvaluation grow, leading to increased interest in defensive stocks like healthcare [8] - The healthcare sector, along with consumer staples and energy, has outperformed technology and consumer discretionary sectors, indicating a shift in investor sentiment [9]