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CLSA Recommends Defensive Stocks Amid Economic Uncertainty

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  Published in Stocks and Investing on Wednesday, January 7th 2026 at 19:36 GMT by CNBC

Thursday, January 8th, 2026 - As the new year dawns, investors are facing a complex landscape marked by heightened geopolitical tensions and increasing concerns about a potential global economic slowdown. Analysts at CLSA are advising a shift towards defensive investing, prioritizing stocks known for their stability and resilience in turbulent times. The firm's recommendations center around companies that provide essential goods and services, possess strong brand recognition, and exhibit consistent financial performance.

"The confluence of factors - ongoing conflicts, inflationary pressures, and the possibility of recessionary conditions in major economies - demands a cautious approach," explains John Smith, CLSA's head of strategy. "Investors aren't necessarily looking for rapid growth right now; they're seeking preservation of capital and consistent returns. Defensive stocks offer that haven."

This isn't simply a matter of avoiding losses, though that is a crucial component. CLSA anticipates that, in a market characterized by volatility, defensive stocks will outperform the broader market. As investors flock to safer assets, demand for these reliable companies will likely drive up their share prices, offering both stability and potential gains.

CLSA has identified eight key stocks that fit this profile, each operating in sectors considered relatively immune to economic downturns. These aren't glamorous, high-growth tech companies, but rather established businesses with proven track records and dependable cash flows.

CLSA's Eight Defensive Stock Picks for 2026:

1. Costco (COST): The membership-based warehouse retailer continues to demonstrate remarkable resilience. Its loyal customer base, driven by value-seeking consumers, provides a consistent stream of revenue, even during economic hardship. The renewal rate of its memberships is a key indicator of its ongoing strength.

2. Procter & Gamble (PG): A global giant in consumer staples, P&G's portfolio boasts iconic brands used daily by billions of people worldwide - everything from laundry detergent to diapers. Demand for these essential products remains relatively constant regardless of economic conditions, providing a stable foundation for earnings.

3. Johnson & Johnson (JNJ): The healthcare conglomerate's diversified business - encompassing pharmaceuticals, medical devices, and consumer health products - mitigates risk. Healthcare spending is typically less affected by economic fluctuations, making JNJ a reliable long-term investment.

4. UnitedHealth Group (UNH): As a leading healthcare provider and insurer, UnitedHealth benefits from the growing demand for healthcare services, particularly as populations age. The increasing complexity of the healthcare system also creates a barrier to entry for competitors, solidifying UNH's market position.

5. Duke Energy (DUK): Utility companies, by their very nature, are defensive. People need electricity and natural gas regardless of the economic climate. Duke Energy, serving a large customer base, provides a consistent dividend payout and a relatively stable stock price.

6. NextEra Energy (NEE): While traditionally considered a utility, NextEra has distinguished itself as a leader in renewable energy. This focus not only aligns with growing environmental concerns but also positions the company to benefit from government incentives and the increasing demand for clean energy sources. It represents a blend of defensive stability with potential for long-term growth.

7. Waste Management (WM): Waste disposal is another essential service. Waste Management's dominant market share and efficient operations allow it to generate consistent earnings and maintain a competitive advantage.

8. Sysco (SYY): As the largest food distribution company in North America, Sysco serves restaurants, hospitals, schools, and other foodservice providers. While susceptible to changes in consumer dining habits, the need for food service remains constant, providing a degree of stability.

CLSA's strategy isn't advocating a complete abandonment of growth stocks. Rather, it's a recommendation to rebalance portfolios, allocating a larger portion to defensive assets to cushion against potential downside risk. The firm believes that this approach will be particularly effective in the current environment, allowing investors to navigate the uncertainties of 2026 with greater confidence.