Defensive Company

DEFINITION of 'Defensive Company'

A corporation whose sales and earnings remain relatively stable during both economic upturns and downturns. Defensive companies may lag behind other companies during periods of economic expansion due to the relative stability of the demand for its products and services. While the demand for some goods and services tends to decrease dramatically during periods of economic instability or turmoil, the demand for the goods and services provided by defensive companies tends to remain stable.


BREAKING DOWN 'Defensive Company'

Companies within the utilities industry, such as water and electricity corporations, are examples of defensive companies because the demand for these goods and services does not soften along with a declining economy. Other companies include those involved in the manufacturing or distribution of food, tobacco and oil.

RELATED TERMS
  1. Defensive Stock

    A stock that provides a constant dividend and stable earnings ...
  2. Defensive Buy

    Securities or investments that are perceived as being lower risk ...
  3. Defensive Acquisition

    The act of firms acquiring other firms and assets as a defense ...
  4. Demand

    An economic principle that describes a consumer's desire and ...
  5. War Babies

    A name given to securities in companies that are defense contractors. ...
  6. Capital Goods Sector

    A category of stocks related to the manufacture or distribution ...
Related Articles
  1. Trading

    Guard Your Portfolio With Defensive Stocks

    Find out how these securities can protect you from a market bust.
  2. Investing

    4 Characteristics Of Recession-Proof Companies

    Investors can find profitable companies - even in a recession. It's all about knowing where to look.
  3. ETFs & Mutual Funds

    5 Best Defensive Mutual Funds for 2016

    Find out the best defensive mutual funds for providing your portfolio with downside protection during the next stock market decline.
  4. ETFs & Mutual Funds

    Do Defensive ETFs Offer Value in Today's Market? (XLU, NEE)

    Discover why defensive ETFs are essential additions to equity portfolios, and learn about three defensive ETFs that combined to beat the S&P 500 over 10 years.
  5. Markets

    Defense & Aerospace Stocks: Are These 2016's Best?

    These four defense stocks offer potential in 2016, each in different ways.
  6. Investing

    Best Places to Find High-Dividend Yield Stocks

    Learn about the advantages of stocks with good dividend yields, such as income, stocks in defensive sectors and strong-performing companies.
  7. Markets

    What is Demand?

    Demand is the economic term for the cumulative wants and desires of consumers as they relate to a particular good or service. Generally speaking, if all other factors remain constant, as demand ...
  8. Markets

    Business Cycle

    The business cycle refers to the fluctuations in economic activity that an economy experiences over a period of time. It consists of expansions, or periods of economic growth, and contractions, ...
  9. Markets

    3 Stocks That Loathe Bull Markets (KO, WMT)

    Explore three stocks that have lagged the market during recent bull markets. Learn why defensive stocks tend to grow slowly in bull markets.
  10. Markets

    What Do Boeing's Recent Large Contracts Mean for Its Future? (BA)

    Find out Boeing’s recent large contracts insulate it from defense contract setbacks after losing competitions with Northrop Grumman and Lockheed Martin.
RELATED FAQS
  1. What other sectors besides utilities are known as defensive?

    See why certain sectors, other than utilities, are considered defensive and therefore more resistant to the downturns of ... Read Answer >>
  2. Why is buying a utility stock known as defensive move?

    Utility stocks are known as defensive stocks for investors due to the fact that consumer demand will remain high even when ... Read Answer >>
  3. What are defensive stocks?

    The term defensive stocks is synonymous to non-cyclical stocks, or companies whose business performance and sales are not ... Read Answer >>
  4. Where do investors tend to put their money in a bear market?

  5. What techniques are most useful for hedging exposure to the financial services sector?

    Learn how smart investors hedge exposure to the financial services sector by also investing in utilities, blue chips and ... Read Answer >>
  6. What other sectors are most highly correlated with the aerospace sector?

    Learn about the aerospace industry and two closely related industries that share many of the same characteristics. Discover ... Read Answer >>
Hot Definitions
  1. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  2. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  3. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  4. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  5. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  6. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
Trading Center