This Defensive Stock Looks Cheap in an Overvalued Sector

On the Aug. 31, 2026, episode of The Morning Filter podcast, hosts Susan Dziubinski and Morningstar Chief US Market Strategist Dave Sekera discuss why Mondelez MDLZ stock is a buy today. Here is an excerpt from the show.

Why We Like Consumer Defensive Stocks for September

Susan Dziubinski: All right, so let’s start this week with your buys for September. Now, your first one is from the

Dave Sekera: This is one where you have to differentiate between the consumer defensive stocks versus the consumer defensive sector overall. From a sector perspective, we think the sector is overvalued because of Walmart WMT and Costco COST, and we’ve talked ad nauseam about why we think those stocks are so overvalued and how it skews the sector valuation too high.

But in this case, when we look at a lot of the individual stocks, we think a lot of the stocks in that sector are undervalued. So, now in a September selloff, historically, the consumer defensive sector tends to do pretty well. Investors will rotate into those defensive sectors where they sell off less to the downside. That’s how I ended up coming up with the consumer defensive sector pick.

Why Mondelez Stock Is a Buy

Dziubinski: Your stock pick in that sector is Mondelez, which we’ve talked about on the podcast before. Why do you still like the stock?

Sekera: Among all the different food names, which generally are undervalued, it’s still my top pick among the food names. It’s a 4-star-rated stock at a 19% discount, pretty healthy dividend yield at 3.3%. We rate the company with a Low

I think the first time we made this one a pick was on Oct. 27, 2025. We’ve re-recommended this stock a couple of times. I think we highlighted it in January of this year when the stock had slipped a little bit, but we still had a very positive view on the long-term trajectory of the company.

Fundamentally, Mondelez has been performing better than most of the food companies. If you took a look at last quarter, they had 2.2% organic sales growth. North America had 3.4% organic sales growth, which was a sequential improvement from the first quarter. Now, Europe is still pretty weak. I’d like to see maybe Europe at least stabilize, if not necessarily turn around.

But when I think about Mondelez and why Mondelez is my top pick, its emerging-market exposure is still the basis for why I think it’s the best pick of the food names. Forty percent of the total sales, 7.4% sales growth in the second quarter. As a long-term investor, we think that’s where the most growth is going to come in the food sector globally over the next couple of years.

Took a quick look at our model: revenue, 3.3% five-year compound annual growth rate. We’re looking for continued margin expansion off of their lows, more toward historical averages. After this year, we’re looking for 9.2% earnings growth from 2028 through 2030, trades at 20 times this year’s earnings, but that drops to 18 times next year’s earnings. So, still a very attractive name in our view.

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