THE FINANCE GHOST: When defensive is too expensive

What makes a stock defensive? Why do investors look for this characteristic in tough times? Most importantly, why do defensive stocks sometimes generate negative returns for investors, despite their description?

Let’s start with the basics. When investors talk about a defensive stock, they are specifically not talking about a cyclical company that can experience immense swings in profitability. We have two recent examples on the JSE, with Astral Foods reporting a drop of up to 90% in headline earnings per share because of almost impossibly tough conditions in the poultry industry, while ArcelorMittal South Africa guided for a drop of 60%-65% in HEPS thanks to several exogenous factors...

Business Business Latest News, Business Business Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

THE FINANCE GHOST: When defensive is too expensiveSure, quality companies with predictable revenues and cash flows are a must-have in share portfolios — but be careful how much you pay for them, writes FinanceGhost.
Source: FinancialMail - 🏆 20. / 63 Read more »

International Finance: Asian equities drop; yen declines on BOJ report: markets wrapStocks in Asia dropped as an unexpectedly strong US jobs report raised the prospects of more rate hikes from the Federal Reserve, while concern over US-China geopolitical tensions also weighed on sentiment.
Source: dailymaverick - 🏆 3. / 84 Read more »

Ghana debt swap deal 'good for you', finance minister tells retireesGhana's finance minister told a group of protesting retiree bondholders on Monday they were being a offered a good deal, as the government of the struggling West African nation pushes to get a domestic debt exchange over the line by Tuesday.
Source: ReutersAfrica - 🏆 31. / 53 Read more »

International Finance: Asian stocks edge higher as investors await Powell: markets wrapUS and European equity futures and Asian stocks made small gains as investors awaited commentary from Federal Reserve chair Jerome Powell later on Tuesday.
Source: dailymaverick - 🏆 3. / 84 Read more »