defensive stocks

[evilroyrule]

:mellow:hello peoples,

have been considering for a while de-risking (just a tad) the portfolio, and rather than putting in all one basket, the idea of defensive stocks appeals. is it just a label, or is there a criteria that stock must/should meet to be regarded as "defensive".

thoughts, comments etc welcome. i have ivanhoe (iva) as my defensive play at the moment, but doubt this meets any necessary criteria.

A stock that tends to remain stable under difficult economic conditions. Defensive stocks include food, tobacco, oil, and utilities. These stocks hold up in hard times because demand does not decrease as dramatically as it may in other sectors. Defensive stocks tend to lag behind the rest of the market during economic expansion because demand does not increase as dramatically in an upswing.

[fungus pudding]

:mellow:hello peoples,

have been considering for a while de-risking (just a tad) the portfolio, and rather than putting in all one basket, the idea of defensive stocks appeals. is it just a label, or is there a criteria that stock must/should meet to be regarded as "defensive".

thoughts, comments etc welcome. i have ivanhoe (iva) as my defensive play at the moment, but doubt this meets any necessary criteria.

A stock that tends to remain stable under difficult economic conditions. Defensive stocks include food, tobacco, oil, and utilities. These stocks hold up in hard times because demand does not decrease as dramatically as it may in other sectors. Defensive stocks tend to lag behind the rest of the market during economic expansion because demand does not increase as dramatically in an upswing.

You start by asking if there is such a thing as a defensive stock, and what the criteria are to meet that definition. Then in your last paragraph, you list defensive stock sectors, outline the characteristics, then describe their behaviour in the market. What is it you want to know again?

[shasta]

:mellow:hello peoples,

have been considering for a while de-risking (just a tad) the portfolio, and rather than putting in all one basket, the idea of defensive stocks appeals. is it just a label, or is there a criteria that stock must/should meet to be regarded as "defensive".

thoughts, comments etc welcome. i have ivanhoe (iva) as my defensive play at the moment, but doubt this meets any necessary criteria.

A stock that tends to remain stable under difficult economic conditions. Defensive stocks include food, tobacco, oil, and utilities. These stocks hold up in hard times because demand does not decrease as dramatically as it may in other sectors. Defensive stocks tend to lag behind the rest of the market during economic expansion because demand does not increase as dramatically in an upswing.

If you are wanting stocks that pay a good dividend yield, but with a fairly static share price (downside largely supported by % yield?)

A couple of stocks i like (as more defensive, income style plays) are TSI, & RCO, maybe even GEM as its defensive but still a growth stock

Disc: Nil held

[evilroyrule]

thanks shasty.

[STRAT]

Best defensive play - know when to sell up and go fishing.Thats what I do and there is no doubt in my mind that is the single most important thing I do. Never mind stock choosing, entry and exit timing. When its all going to hell in a handbag sitting on the sidelines is the only defensive play




Dont always go fishing though.

[shasta]

Look at what happened with REITs in the GFC. Good div yields wont save you - they can always be cut. Also TLS is a classic example of a supposedly defensive stock. No point getting a divvy if your capital is going to dwindle away to nothing!

The stocks i mentioned have increased dividend payments & pay them out of surplus cashflows.

Doesnt mean they wont go down with the general market but, these seem to be fairly consistent stocks & not very exciting!

[lewinsky]

The ticker for RCO comes up as Royalty Resources - a defensive stock?

If you are looking at defensive stocks, look at the dividend and sp trend, Shasta is also correct at looking the operating cashflow, it is the first thing i zero in on when looking at an Annual Report (except when Bendon was listed).

I have tucked a little bit into HHY and DUE. I would classify them as defensive with a yield over 11%.

Cheers

lew

[shasta]

The ticker for RCO comes up as Royalty Resources - a defensive stock?

If you are looking at defensive stocks, look at the dividend and sp trend, Shasta is also correct at looking the operating cashflow, it is the first thing i zero in on when looking at an Annual Report (except when Bendon was listed).

I have tucked a little bit into HHY and DUE. I would classify them as defensive with a yield over 11%.

Cheers

lew

RCO is a different type of resource stock, it buys royalties to provide an income stream, they have a pipeline of future royalties so its worth reading there recent presentation.

They also get GOLD bullion as part of one of there royalty agreements, so with cash & gold taken off there market cap, its got quite a low EV, < $10m

RCO are looking to pay 2c fully franked divdends twice a year, with a share price ~40c, thats a 10% yield & thats by paying out 60% of operating cashflow/profits (they have no debt either, so cashflows are used to buy more royalties & pay dividends)

Not the most exciting stock on the ASX, but surely with fixed cashflows each quarter (& the likes of OZL on the share register) the downside is protected as it should be seen as a yield play, not a resource stock.

They do have another royalty stream coming onboard this quarter

[Valuegrowth]

:mellow:hello peoples,

have been considering for a while de-risking (just a tad) the portfolio, and rather than putting in all one basket, the idea of defensive stocks appeals. is it just a label, or is there a criteria that stock must/should meet to be regarded as "defensive".


thoughts, comments etc welcome. i have ivanhoe (iva) as my defensive play at the moment, but doubt this meets any necessary criteria.

A stock that tends to remain stable under difficult economic conditions. Defensive stocks include food, tobacco, oil, and utilities. These stocks hold up in hard times because demand does not decrease as dramatically as it may in other sectors. Defensive stocks tend to lag behind the rest of the market during economic expansion because demand does not increase as dramatically in an upswing.

Yes it is time to get defensive.

http://www.startribune.com/business/253457311.html
When is a tech bubble a tech bubble? My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please note that I do not endorse or take responsibility for material in the above hyper-linked site. Please do your own research.

[winner69]

It's too bad you can only call a bubble in hindsight. I certainly don't see mania here with unanalysable metrics and everyonr and their dog earning certain stocks. Not to mention this "bubble" has been called for years on end now.

Hmmm...

Probably been in bubble territory for a while ....just a small bubble .....getting bigger and bigger

How big can a bubble get before it pops?

Maybe never know until it does pop .....or it might just slowly deflate ....who knows

[DarkHorse]

One way to get defensive:
According to the American Association of Individual Investors, Piotroski's F Score - 9 criteria for financial strength of low price-book stocks - was the only one of its 56 screening methodologies that had positive results in 2008 (up 32.6% on average across 5 stocks, versus -41.7% for all of the AAII strategies over the same period). It also has an excellent record over longer periods,
http://www.stockopedia.com/content/the-piotroski-f-score-a-fundamental-screen-for-value-stocks-55711/
However, for a few of the worst months of 2008 no US stocks passed the F score 8/9 test...
Has anyone used this screen for Australian stocks, and if so are there any good tools available?