2 Defensive Stocks to Buy While the Price Is Right

On the Sept. 21, 2026, episode of The Morning Filter podcast, hosts Susan Dziubinski and Morningstar Chief US Market Strategist Dave Sekera discussed why now is the time to buy Procter & Gamble PG and Hershey HSY. Here is an excerpt from the show.

Why Procter & Gamble Finally Looks Attractive

Susan Dziubinski: It’s time for the picks portion of this week’s podcast. This week, Dave’s brought us four stocks that have recently pulled back that he thinks look attractive. The first one up today is Procter & Gamble PG. Give us the highlights, Dave.

Sekera: Sure. P&G is currently a 4-star-rated stock right at that border between 4 stars and 3 stars, trades at only a 5% discount, and has pretty healthy dividend yield at 3%. It is a company we rate with a Low Uncertainty, I think, as most people would expect, which is why you don’t need that much of a discount from intrinsic valuation to start looking attractive. And, of course, we also rate it with a wide economic moat, that moat being based on cost advantages and intangible assets.

Dziubinski: You pointed out that Procter & Gamble stock isn’t terribly undervalued right now. Why is this a pick at this price?

Sekera: Well, if you look at our longer-term price/fair value chart, this one actually had been a 2-star-rated stock for a pretty long time. And at this point, that stock price is close to where it was trading all the way back in mid-2020. In my mind, I think of Procter & Gamble as being a core holding type of stock, but of course you have to buy it at the right price. And this is just one we had not been able to recommend in the past because it had been overvalued, and it’s finally at the point where the price and the valuation make sense. And again, thinking about those kinds of stocks I looked at as being core holdings for most portfolios: wide moat, Low Uncertainty, attractive dividend yield at 3%, and not only attractive at 3%, but if you look at their dividend history, they just have a consistent history of raising it every year. I would suspect that they probably continue to raise it at least at the same rate of inflation, if not even slightly higher than inflation over time.

Looking at some of the other aspects here, very strong balance sheet, looks like they’re rated Aa3, AA-, Exemplary Capital Allocation. So, again, it’s one where it’s finally starting to look attractive here. When I look at our model forecasts, I think they’re probably pretty modest. I mean, for the most part, we’re just looking for inflation and maybe low single-digit volume growth, only looking for modest operating margin expansion. And lastly, a good consumer defensive stock is going to be one of the ones that’s going to be least affected by the macrodynamic headwinds we’ve talked about the past month or so. If we did go into any kind of risk-off environment, I think this one would do well if the rest of the market’s in that risk-off downward trend.

Why Hershey Is Back in 5-Star Territory

Dziubinski: Your next pick this week is another consumer name. It’s Hershey HSY. Tell us about it.

Sekera: Hershey’s trading at a 25% discount to fair value. That’s enough to put it in 5-star territory. It is one that we rate with a Low Uncertainty as well. Attractive dividend yield at 3.4%, and we rate it with a wide economic moat also based on cost advantages and intangible assets.

Dziubinski: There are kind of a lot of undervalued stocks in that sort of packaged-food snack space because, of course, these companies have been facing headwinds. What do you like about Hershey specifically?

Sekera: This is one we’ve recommended a couple of times, and it’s bounced around enough that this is one where you’ve actually been able to trade this one around quite a bit. If you had that core holding, you were able to dollar-cost average into the downside, and then it moved back up, you’re able to take some profit off the table.

Historically, I mean this is one where, again, I hadn’t been able to recommend it too far in the past because it used to trade at a pretty large premium to our intrinsic valuation. It got hit in the second half of 2024 and into the first half of 2025 because cocoa prices were rising at just astronomical rates because of some issues in the cocoa market. And in fact, this stock was also a 5-star stock as recently as early 2025. It then rallied too far to the upside. In fact, it was a 2-star-rated stock in early 2026. And once again, it’s now fallen enough to the downside that it looks pretty attractive.

Just a quick synopsis of the company itself. One of the things I think is a real positive here for investors is that they have the highest market share in the US. They’ve got 36% market share. The next closest competitor is going to be Mars at only 29%. But once you get away from those two, you have really low market share across the remaining branded and private-label competitors. A little bit of a duopoly kind of business. I think between those two, they’re able to do a pretty good job managing pricing in the marketplace because between the two, they have such a large market share.

Now, you’re talking about how a lot of these other food companies have been negatively impacted by GLP-1s; I don’t think chocolate as a category has been as negatively impacted because, to some degree, purchasing chocolate is much more of an indulgent type of purchase and has a lot of emotional connotations to it. And it’s also much more tied to holidays, gifting, celebrations, small treats for consumption, and things like that. Again, this is one of those categories that hasn’t been hit nearly as much. And then if you look at Hershey, some of their other categories like gum and mints actually tend to do well as more people are on GLP-1s because then they enjoy having that flavor without actually having to consume something.

Just a quick look at our forecast and our model here: We’re looking for a five-year compound annual growth rate for revenue of 3.8%. We’re looking for operating margins to recover back toward historical norms. Even if you look at our 2030 forecast for operating margin, it’s still below what the company actually did in 2024. We’re not even getting back toward peak margins in order to get this company to be looking pretty attractive here. Overall, we’re looking for 12% earnings growth, taking a quick look at where the stock is trading. It is trading at 20 times our 2026 earnings estimate that falls to 17.5 times our 2027 earnings estimate. And with that 3.4% dividend yield, I think it just looks like a pretty solid value play today.

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