• Despite the current market volatility, Intuitive Surgical’s share price is relatively resilient.
  • NRG Energy continues to benefit from improved pricing, grid efficiency and inflation reduction measures.
  • Defensive stocks help us overcome the current volatile environment.

Defensive Stocks for Volatile Markets
Market volatility is back in the headlines after the Federal Reserve continued to raise rates at its recent meeting. The Dow Jones fell below 30,000 and in bear market territory he joined the S&P 500. With inflation still high and jobs data remaining low, a 75 basis point rate hike in the next two Federal Reserve meetings is almost certain, putting pressure on liquidity and thus financial assets. It keeps taking. When looking to allocate capital during periods of high volatility, investors can increasingly look to defensive stocks with long-term sustainable competitive advantage and consistent portfolio cash flow. .

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Consider the following two stocks

Intuitive Surgical (NASDAQ: ISRG) is an American medical robotics company that designs and manufactures robotic products to improve clinical outcomes, with its most successful product continuing to be the Da Vinci system, which continues to make inroads into the operating room. . Medical device inventories are expected to grow over the next eight years, and the medical robotics market is expected to grow steadily at an annual rate of 16% over the same period, potentially generating $44 billion in revenue at that point. Shares continue to perform well despite the broader market decline, currently down 15% compared to the broader market, which is down 20% or more on average.

On average, the healthcare industry has good long-term economics. In particular, as the world’s average age rises, the number of people requiring medical care is increasing. Additionally, the global healthcare industry is increasingly investing in technology to improve medical outcomes globally, and this will only improve the fortunes of companies such as Intuitive Surgical. Global growth maintains momentum as China, Japan and Asia in particular are at the forefront of demand, with growing economies and increasing levels of investment driving a shift from traditional surgical instruments to modern devices should help you do that.

ISRG has grown revenue by 16% and earnings per share by 17% over the past five years. As for valuations, the company is still expensive at his 48x P/E and 33x forward P/E. Investors may think these valuations are a little steep, but the consistency of growth and earnings means the market will continue to place a premium on stocks. One of the good things about stocks is that they have little to no debt. That means we are unlikely to run into any real problems during the current rate hike cycle. If you’re looking for a long-term investment in a business that produces consistent results and steady cash flow, consider equities.

NRG Energy (NYSE: NRG) A utility company in the unregulated energy sector. Its business revolves around integrated electric power companies operating in Texas, East and West of the United States. The company produces, markets and provides power and related products and services to approximately 6 million residential, commercial, industrial and wholesale customers. Generate electricity using natural gas, coal, oil, solar, nuclear and storage batteries.

NRG Energy is increasing its investment in smart grids to give users more control over their electricity usage. However, despite our best efforts, prices in the energy sector, especially in the residential energy market, are trending upwards. NRG Energy continues to be at the heart of the power supply sector. That means earnings should be consistent and less volatile than other sectors. Results have remained strong throughout the first few quarters, and states such as Texas, where most of the business operates, had unusually hot summers, which should help boost earnings further in the next few quarters.

The company’s valuation is relatively stable, with a future price/earnings multiple of 9x, and rising energy prices could drive the stock higher over the next few quarters. Also, the company pays him a 3.55% dividend and debt is relatively manageable, with debt to equity he’s 1.5. NRG Energy will also benefit from the latest legislation passed by Congress, specifically the Reducing Inflation Act to fund carbon reduction projects. Overall, the utilities industry remains strong despite the uncertain macroeconomic environment, making it a good fit for companies looking to overcome volatility.

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