5 Defensive Companies That Can Keep Growing the Bottom Line

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 |  Includes: CELG, FLS, JNPR, MU, TER
by: Follow My Alpha

To most it seems like the world is burning. Still, others might disagree given that for some reason certain companies keep on growing the bottom line in good times and bad (like right now). Many in the financial world might balk at the idea currently and say this is impossible, but we have facts that say otherwise. In our view, now is the time when chaos will prevail in the market but a steady and calm hand can still guide the ship of a pragmatic investor. In our view, it's time to review “cheaper" defensive names that can not only talk the talk but walk the walk.

We ran a screen for companies that on average have consistently grown the bottom line by a good degree (5-year average earnings growth rate>20%). From this pool, we screened for companies that had a moderate debt ratio (X<.2). We used this measure because it provides investors with a better picture of what the firm’s debt load looks like and how manageable it is. This allowed us to provide a list of companies that illustrate real “defensive” characteristics that can weather volatility. We did not screen out any sectors or market caps for this list.

1. Celgene Corp (NASDAQ:CELG)

Sector

Healthcare

Industry

Biotechnology

Market Cap

24.04B

Beta

0.71

Analyst Sentiment

18/27 List - Buy/Outperform (Bullish)

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The company develops and sells innovative therapies that treat immune-inflammatory diseases, cancer, and more. The firm has a debt ratio of 17.36%. The firm’s 5-year average earnings growth rate is 54.40%. Over the last month has lost 15.49%.

Short Interest Note: The short interest for the firm is 1.80% as of 07/15/2011.

2. Flowserve Corp (NYSE:FLS)

Sector

Industrial Goods

Industry

Diversified Machinery

Market Cap

$4.60B

Beta

1.76

Analyst Sentiment

8/12 – List Buy/Outperform (Bullish)

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The company manufactures and services flow control systems. The firm has a debt ratio of 16.61%. The firm’s 5-year average earnings growth rate is 42.40%. Over the last month FLS has lost 24.35% .

Short Interest Note: The short interest for the firm is 1.40% as of 07/15/2011.

3. Micron Technology Inc (NASDAQ:MU)

Sector

Technology

Industry

Semiconductor- Memory Chips

Market Cap

$5.73B

Beta

0.95

Analyst Sentiment

18/27 - List Buy/Outperform (Bullish)

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The company manufacturers primarily CMOS image sensors along with DRAM AND NAND flash technology. The firm has a debt ratio of 12.15%. The firm’s 5-year average earnings growth rate is 33.70%. Over the last month MU has lost 25.64%.

Short Interest Note: The short interest for the firm is 6.60% as of 07/15/2011.

4. Teradyne Inc (NYSE:TER)

Sector

Technology

Industry

Semiconductor Equipment & Materials

Market Cap

$2.08B

Beta

1.95

Analyst Sentiment

8/14 - Buy/Outperform (Bullish)

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The company supplies automatic test equipment products for circuit-board tests, military/aerospace automotive diagnostic, and more. The firm has a debt ratio of 10.40%. The firm’s 5-year average earnings growth rate is 32.40%. Over the last month TER has lost 24.82%.

Short Interest Note: The short interest for the firm is 11.50% as of 07/15/2011. Given that the number is higher than 10% this could indicate that the firm is a short favorite or could become a great short squeeze.

5. Juniper Networks Inc (NYSE:JNPR)

Sector

Technology

Industry

Networking & Communication Devices

Market Cap

$10.74B

Beta

1.46

Analyst Sentiment

22/43 – List Hold/Neutral (Neutral)

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The company builds and sells services and products that generate performance Internet Protocol platforms. The firm has a debt ratio of 10.40. The firm’s 5-year average earnings growth rate is 27.30%. Over the last month JNPR has lost 37.11%.

Short Interest Note: The short interest for the firm is 2.60% as of 07/15/2011.

We hope this helps investors as they do their own due diligence and look for defensive companies that can weather the storm we’re all going into.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.