Analysis of Defensive Stock Investment Opportunities
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 20 2026
0mins
Should l Buy COST?
Source: Fool
- Costco's Market Resilience: Costco has only failed to deliver annual revenue growth once in the past 33 years, and even during the 2009 recession, its revenue dipped only 1.5%, demonstrating its strong resilience during economic turmoil, making it attractive for investors seeking stability.
- AT&T's Stable Returns: As one of the largest wireless carriers in the U.S., AT&T offers a high dividend yield of 4%, and despite experiencing revenue declines in four of the past six years, analysts expect positive growth to continue over the next two years, highlighting its appeal during market fluctuations.
- Coca-Cola's Dividend King Status: Coca-Cola is renowned for its 64 consecutive years of dividend increases, earning it the title of 'Dividend King', and its high-margin business model allows it to attract consumers even during economic downturns, ensuring stable cash flow and investor confidence.
- Need for Defensive Investments: Given the increasing economic uncertainty, investors should consider incorporating defensive stocks like Costco, AT&T, and Coca-Cola into their portfolios to mitigate risks associated with market volatility and secure long-term returns.
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Analyst Views on COST
Wall Street analysts forecast COST stock price to rise
24 Analyst Rating
19 Buy
4 Hold
1 Sell
Strong Buy
Current: 979.650
Low
769.00
Averages
1061
High
1205
Current: 979.650
Low
769.00
Averages
1061
High
1205
About COST
Costco Wholesale Corporation (Costco) operates membership warehouses and e-commerce sites that offer a selection of nationally branded and private-label products in a wide range of categories. The Company buys the majority of its merchandise directly from suppliers and route it to cross-docking consolidation points (depots) or directly to its warehouses. It operates 891 warehouses, including 614 in the United States and Puerto Rico, 108 in Canada, 40 in Mexico, 35 in Japan, 29 in the United Kingdom, 19 in Korea, 15 in Australia, 14 in Taiwan, seven in China, five in Spain, two in France, and one each in Iceland, New Zealand and Sweden. It also operates e-commerce sites in the United States, Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan and Australia. The Company provides wide selection of merchandise, plus the convenience of specialty departments and exclusive member services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Increased Market Competition: Costco's launch of Kirkland Signature energy drinks, while unlikely to have a major direct impact on Celsius, could divert some consumers, particularly in a price-sensitive market environment.
- Sales Growth Slowdown: Following the acquisition of Alani Nu, Celsius achieved revenue growth of 85%, 173%, and 117%, but is expected to see a slowdown to 132% growth in the current quarter, reflecting insufficient market confidence in its sustained growth.
- Attractive Valuation: Despite Celsius's strong growth trajectory, its current P/E ratio stands at 21 times, with a forward P/E of just 16 times projected earnings, indicating that its stock may be relatively cheap and could attract investor interest.
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- Rising Inflation Pressure: With inflation exceeding 3% in January, combined with slowing GDP growth, concerns about stagflation may arise, leading to reduced consumer spending and threatening corporate profitability.
- Surge in Oil Prices: West Texas Intermediate crude oil prices have surged from $57 on January 2 to $93, even exceeding $100 at times, increasing consumer energy expenditure pressure and potentially suppressing spending in other areas.
- Uber's Autonomous Driving Partnerships: Uber has recently formed partnerships with several companies, including Waymo and Lucid, indicating its proactive positioning in the autonomous driving sector, which may lay the groundwork for future market share growth.
See More
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- GDP Growth Slowdown: The GDP growth rate for Q1 2026 is only 0.7%, significantly lower than the previous estimate of 1.4%, indicating economic stagnation that may heighten investor concerns about future economic prospects.
- High Inflation Pressure: With inflation exceeding 3% in January, combined with low growth, market fears of stagflation are rising, which could negatively impact consumer spending and business investment decisions, further dragging down economic recovery.
- Surging Oil Prices Impact: As of the recording date, West Texas Intermediate crude oil prices have reached $93 per barrel, a significant increase from $57 on January 2, which may force consumers to cut back on other expenditures due to rising energy costs, affecting overall economic activity.
- Geopolitical Risks: The rise in oil prices is primarily driven by geopolitical conflicts rather than demand growth, particularly due to uncertainties surrounding Iran, which could lead to a more pessimistic economic outlook, necessitating close monitoring of related developments.
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See More
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- Financial Performance Comparison: Walmart and Costco reported overall revenue growth of 5.6% and 7.4%, respectively, which lags behind Amazon's 10% growth in the fourth quarter, reflecting slower growth rates in their retail operations compared to Amazon.
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See More
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- Increased Market Competition: Celsius Holdings' shares have plummeted 21% over the past six trading days, primarily due to Costco's launch of a new energy drink line, although analysts believe the market reaction is overdone as Celsius continues to gain market share.
- Sales Growth Recovery: Following the acquisition of Alani Nu, Celsius has reported revenue growth of 85%, 173%, and 117% over the past three quarters, with a projected 132% increase in the current quarter, indicating strong market demand and brand appeal.
- Profitability Improvement: Celsius has exceeded analyst earnings estimates in the last three quarters, with Q1 actual EPS at $0.47, surpassing expectations by 93%, demonstrating the company's ongoing enhancement in profitability.
- Valuation Attractiveness: Despite Celsius's nearly perfect growth trajectory, its current P/E ratio stands at just 21 times this year's earnings, with a projected 16 times for next year, indicating that its stock remains attractive in the current market environment.
See More
Celsius Shares Drop 20% Amid Market Challenges
- Stock Decline: Celsius has seen its stock price drop over 20% in the last six trading days, currently trading at 16 times next year's projected earnings, indicating market concerns about its future growth prospects.
- Increased Market Competition: Costco's launch of Kirkland Signature energy drinks, while unlikely to have a major direct impact on Celsius, could divert some consumers, particularly in a price-sensitive market environment.
- Sales Growth Slowdown: Following the acquisition of Alani Nu, Celsius achieved revenue growth of 85%, 173%, and 117%, but is expected to see a slowdown to 132% growth in the current quarter, reflecting insufficient market confidence in its sustained growth.
- Attractive Valuation: Despite Celsius's strong growth trajectory, its current P/E ratio stands at 21 times, with a forward P/E of just 16 times projected earnings, indicating that its stock may be relatively cheap and could attract investor interest.
See More
2026 Economic Outlook and Uber Developments
- GDP Growth Slowdown: The GDP growth rate for Q1 2026 is only 0.7%, significantly lower than the previous estimate of 1.4%, indicating a sluggish economic recovery that may dampen investor confidence and negatively impact stock market performance.
- Rising Inflation Pressure: With inflation exceeding 3% in January, combined with slowing GDP growth, concerns about stagflation may arise, leading to reduced consumer spending and threatening corporate profitability.
- Surge in Oil Prices: West Texas Intermediate crude oil prices have surged from $57 on January 2 to $93, even exceeding $100 at times, increasing consumer energy expenditure pressure and potentially suppressing spending in other areas.
- Uber's Autonomous Driving Partnerships: Uber has recently formed partnerships with several companies, including Waymo and Lucid, indicating its proactive positioning in the autonomous driving sector, which may lay the groundwork for future market share growth.
See More
2026 Economic Outlook and Oil Price Fluctuations
- GDP Growth Slowdown: The GDP growth rate for Q1 2026 is only 0.7%, significantly lower than the previous estimate of 1.4%, indicating economic stagnation that may heighten investor concerns about future economic prospects.
- High Inflation Pressure: With inflation exceeding 3% in January, combined with low growth, market fears of stagflation are rising, which could negatively impact consumer spending and business investment decisions, further dragging down economic recovery.
- Surging Oil Prices Impact: As of the recording date, West Texas Intermediate crude oil prices have reached $93 per barrel, a significant increase from $57 on January 2, which may force consumers to cut back on other expenditures due to rising energy costs, affecting overall economic activity.
- Geopolitical Risks: The rise in oil prices is primarily driven by geopolitical conflicts rather than demand growth, particularly due to uncertainties surrounding Iran, which could lead to a more pessimistic economic outlook, necessitating close monitoring of related developments.
See More
Analysis of Retail Sector Impact from Rising Oil Prices
- Impact of Rising Oil Prices: Brent crude futures have surged above $110 per barrel due to the ongoing Middle East conflict, with diesel prices exceeding $5 per gallon for the first time since 2022, potentially imposing secondary effects on the U.S. retail sector and increasing household budget pressures.
- Advantage of Higher-Income Customers: Deutsche Bank analysts noted that retailers like Ulta Beauty and Costco, which cater to higher-income demographics, have historically shown a positive correlation between sales and rising oil prices, indicating better sales performance in such environments.
- Pressure on Lower-Income Customers: Conversely, retailers like BJ's Wholesale Club and Burlington Stores, which primarily serve lower-income customers, exhibit negative sales correlations with rising gas prices, highlighting a trend where lower-income consumers reduce spending as fuel costs increase.
- Inventory Management Strategy: Despite the risks associated with rising input costs, many global brands, including Amer Sports and Birkenstock, maintain over 200 days of finished goods inventory, which helps mitigate near-term margin pressures and ensures market stability amid supply chain disruptions.
See More
Walmart and Costco Start 2026 Strong Amid E-Commerce Growth
- E-Commerce Sales Surge: Walmart's U.S. e-commerce sales rose 27% last quarter, marking its eighth consecutive quarter of over 20% growth, indicating strong performance in the e-commerce sector despite a challenging overall market environment.
- Market Share Competition: Despite strong e-commerce results, both Walmart and Costco have failed to capture additional market share from Amazon, whose e-commerce market share increased from 34.4% in 2024 to 35.7% in 2025, underscoring its continued dominance.
- Financial Performance Comparison: Walmart and Costco reported overall revenue growth of 5.6% and 7.4%, respectively, which lags behind Amazon's 10% growth in the fourth quarter, reflecting slower growth rates in their retail operations compared to Amazon.
- Investor Sentiment Impact: Although Amazon's cloud computing business faces uncertainties with management planning to invest over $200 billion in AWS expansion in 2026, its stock remains undervalued, suggesting long-term investors may find attractive buying opportunities in both retail and cloud computing sectors.
See More
