3 Defensive Plays When Markets Get Shaky: What the Data Says

With recession odds hovering around 61% for the year, the playbook shifts. Instead of chasing growth, smart money is rotating into what traders call “boring but steady.” Here’s the pattern: low-volatility stocks + decent dividends + reasonable valuations.

Pharma’s Hidden Edge (PFE)

Pfizer might’ve tanked recently, but the valuation math is interesting. Trading at 11.4x forward earnings with a 4.08% dividend yield—that’s the kind of yield you can actually sleep on. Why pharma? Simple: people still need meds in a downturn. Cash flows don’t care about GDP.

The company’s sitting on a fat pipeline of new drugs coming to market, which means revenue stays sticky. Plus, they’re actively shopping for acquisitions (word is they’re circling Seagen for potentially $30B), which typically signals confidence in future earnings power.

Gold’s Tailwind Play (NEM)

2022 was brutal for gold as rates spiked, dragging Newmont down with it. But here’s the flip: if recession fears are legit, the dollar weakens. A weaker greenback = gold rallies (it’s historically reliable).

Newmont’s balance sheet is fortress-like ($6.7B liquidity buffer, investment-grade rating) with 96 million ounces of proven reserves locked in. At 3.67% dividend yield and improving gold prices, free cash flow expansion should follow. The dividend hike cycle typically lags gold strength by 1-2 quarters.

The Defensive Retail Play (COST)

Costco’s January numbers showed 6.9% YoY sales growth—that’s resilient in a slowdown environment. But here’s the real moat: membership revenue. $4.3B in the last 12 months from membership fees alone, with a high renewal rate that’s practically recession-proof.

That’s recurring revenue most retailers dream about. New store openings keep compounding it. As a dividend stock, it’s the rare retail name that actually delivers.

The Bottom Line

Recession playbook = capital preservation + income generation + valuation gaps. These three hit that trifecta. The dollar-weakening scenario favors gold, pharmaceutical resilience is structural, and Costco’s moat gets stronger when consumers tighten spending. It’s not exciting, but that’s kind of the point.