Morningstar Touts Undervalued Defensive Stocks Amid Market Uncertainty
Historically, September is the worst month for stocks, but Morningstar's Chief US Market Strategist Dave Sekera doesn't predict a downturn. Instead, he recommends defensive stocks to buy in case of market volatility.
Among his picks are Mondelez International MDLZ, Alliant Energy LNT, and Baxter International BAX. However, this article focuses on three more defensive stocks that may be resilient if the market takes a turn for the worse: UnitedHealth Group UNH, Portland General Electric POR, and Lamb Weston LW.
UnitedHealth Group is a narrow-moat company in the healthcare sector with a top-tier health insurer, pharmacy benefit manager, provider, and health analytics franchise. Despite facing regulatory challenges, the company put up strong second-quarter results and lifted its outlook for 2026. Morningstar raised its fair value estimate on the stock by 11% to $475 per share.
Portland General Electric is a narrow-moat utility that recently reached a settlement with Oregon regulators, allowing it to create a holding company structure like most US utilities. This could enable it to finance investments outside its regulated utility and potentially make acquisitions or growth investments that boost shareholder returns. We forecast 7% annual earnings growth through 2029.
Lamb Weston is a consumer defensive company and North America's largest producer of branded and private-label frozen potato products. Despite the current supply/demand imbalance, we view frozen processed potatoes as positioned for cyclical recovery. Morningstar assigns Lamb Weston stock a $65 fair value estimate.