With the Fed again talking tough on inflation and hinting at possible rate hikes if disinflation stalls, many high growth trades can feel more fragile than they did a few months ago. That is where defensive value stocks start to look interesting. This article walks through three large utility, consumer staples, and healthcare stocks exposed to this rate narrative, and explains how each might fit into a watchlist today.

The three stocks in this article are just a starting sample, and the full screen surfaced 24 more large utilities, consumer staples, and healthcare companies with similarly compelling defensive value stories that are not covered here. To go straight to the data and identify which ones best fit your own criteria, analyze them directly in the Defensive Value Stocks (Utilities, Consumer Staples, Healthcare) screener.

Metcash (ASX:MTS)

Overview: Metcash is a wholesale and distribution company that supplies food, liquor, and hardware products to independent supermarkets, convenience stores, hotels, and hardware retailers across Australia, operating well known banners like IGA, Foodland, Mitre 10, Total Tools, and Cellarbrations.

Operations: Metcash generates around A$9.2b from Food, A$5.4b from Liquor, and A$2.8b from Hardware and Tools, with all reported revenue of about A$17.4b coming from Australia.

Market Cap: A$3.4b

Metcash stands out as a large Australian consumer staples and hardware distributor with scale and brand reach through IGA and Mitre 10, and a wholesale model that can appeal when investors are cautious on rate sensitive, higher risk assets. The stock screens as relatively inexpensive on P/E versus peers while analysts currently forecast modest revenue and earnings growth, which may support interest from value focused investors who also want some growth potential. At the same time, earnings margins are thin and hardware and liquor volumes face competitive and cost pressure, so any disappointment in these areas can be significant. For investors monitoring how a higher for longer rate backdrop could affect retail, Metcash offers a mix of defensive food exposure and more cyclical hardware that some may find worth a closer look.

Metcash’s mix of defensive food exposure and higher beta hardware is not fully reflected in the current P/E story, and the real twist only becomes clear when you unpack the 3 key rewards and 1 important warning sign

Build your own defensive value shortlist around Metcash

Metcash and the two other stocks in this article all came out of a single screen, but your best ideas will come from filters that match how you like to invest. Use our flexible Screener to mix metrics like valuation, growth, balance sheet and dividends into your own watchlist, or lean on our curated Investing Ideas for ready made starting points.

Agilent Technologies (A)

Overview: Agilent Technologies is a US$39b life sciences and diagnostics company that sells high end lab instruments, software, and services used in pharmaceutical research, clinical testing, environmental monitoring, and chemical analysis worldwide.

Operations: Agilent generates about US$3.0b from its Agilent CrossLab services and consumables segment, US$2.8b from Life Sciences and Diagnostics Markets, and US$1.4b from Applied Markets.

Market Cap: US$39.3b

Agilent Technologies combines a large installed base of lab instruments with expanding recurring revenue from services, consumables, and software, which can appeal if you want healthcare exposure that is less sensitive to short term rate swings. Earnings growth of 21.3% over the past year, improving profit margins, and analysts seeing solid future earnings growth all point to a business that is still investing for the next product cycle, including AI enabled lab workflows and new FDA approved diagnostics. The trade off is higher funding risk from reliance on external borrowing and exposure to tariffs and government research budgets. For investors weighing quality against macro risk, Agilent’s mix of defensiveness and AI and diagnostics upside is worth studying more closely.

Agilent’s blend of recurring lab revenues and AI linked diagnostics has many investors focused on growth, while the real story sits in the cash flows and funding mix. Get the full picture in the analysis report for Agilent Technologies

Weis Markets (WMK)

Overview: Weis Markets is a regional US supermarket chain that sells groceries, fresh food, pharmacy services, fuel, and everyday household items through stores operating mainly under the Weis Markets brand across several Mid Atlantic states.

Market Cap: $1.9b

Weis Markets sits squarely in the consumer staples camp, which can appeal when investors are cautious about rate sensitive growth stocks and looking for steadier demand. The business has produced what some analyses describe as high quality earnings, supported by experienced management and an independent board. However, earnings have declined over the past 5 years and profit margins are slim at around 2.0%. Recent results show revenue growth but softer quarterly net income, and the dividend yield of 1.82% is not comfortably covered by free cash flow. In addition, the P/E is lower than many consumer retail peers. Overall, the stock offers an interesting mix of defensive supermarket exposure and clear execution risks that deserve closer scrutiny.

Weis Markets looks like a steady supermarket story, yet its slim 2.0% margins, softer recent net income, and uncovered 1.82% yield hint at something investors may be missing. Unpack the analysis report for Weis Markets

Seeking Alternatives Before The Crowd Moves

Fresh ideas do not stay under the radar for long. Once momentum builds, the best entry points get caught and start flying. Check these screens now and get in early.

• Target resilient payers that aim to keep cash flowing even when markets cool by scanning our curated list of 4 dividend fortresses.
• Hunt for future compounders hiding in plain sight by running the 12 high quality undiscovered gems, built to surface quality that most investors still overlook.
• Ride long term infrastructure trends tied to AI demand by reviewing the 37 power grid technology and infrastructure stocks, focused on companies supporting the electricity backbone of tomorrow while it still trades off many radar screens.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.