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With the stock market in a freefall due to worries about a weak economy and a weak consumer, we reviewed the market for some classical defensive names. These are businesses that should continue to perform well even with a weak consumer. If the economy dips into another recession, the safest bet is to own companies that appeal to recession-weary consumers. We identified four key areas in which consumers will continue to spend even with the threat of another recession: value retailing, value-orientated food manufacturers,value advertising and value-orientated entertainment. As you can tell, the key word is value. Value doesn't always mean cheap; in most consumers' minds, value equals quality + price. These 7 stocks offer consumers attractive pricing and good value.

Dollar Tree (DLTR)

Market Cap: $9.0B
Forward P/E: 16.1
PEG: 1.07

Dollar Tree continues to expand its store count and is now reaching critical mass in many markets, allowing it to increase its advertising to support local stores. The expansion of food and personal care items has also led to improved margins and greater growth as shoppers expand their percentage of food purchases bought in the dollar store format. Food manufacturers are also taking notice and are offering more "dollar formatted" goods to this channel.

Family Dollar (FDO)

Market Cap: $6.0B
Forward P/E: 11.9
PEG: 0.95

Family Dollar is the number three player in the dollar store space, behind Dollar Tree and the leader Dollar General (DG). Their business is benefiting from the same trends as Dollar Tree, but with the added kicker of being a potential takeover candidate. Consolidation in the segment will eventually occur, and Family Dollar is the most likely to be acquired.

Treehouse Foods (THS)

Market Cap: $2.2B
Forward P/E: 18.1
PEG: 1.70

Treehouse is the leading manufacturer of private-label food products, with offerings in soup, salsa, non-dairy creamers, dressings, pickles, jams, powdered drink mixes, hot cereal and even coffee. The stock has run up over the last few weeks, so I would wait for a pullback, but if we are heading for a double-dip recession, Treehouse is well positioned.

Ralcorp (RAH)

Market Cap: $ 4.1B
Forward P/E: 13.1
PEG: 1.64

RAH is a leader in private-label food manufacturing with strength in cereal, frozen baked goods, cookies and other snack food products. It recently spurned a takeover offer from ConAgra Foods (CAG) and so the stock is trading at more of a value than Treehouse. Ralcorp has announced its intention to spin off its branded Post cereal division. This will make it more of a pure-play private-label manufacturer in the future.

General Mills (GIS)

Market Cap: $24.6B
Forward P/E: 13.5
PEG:1.96

Unlike Treehouse and Ralcorp, General Mills is a branded food manufacturer with strong positions in cereal, yogurt, bakery and soup. Its growth has been hurt by the run-up in commodity prices, most notably wheat and corn. GIS is more directly tied to the price of grains than most branded food manufacturers, which in the past year has been bad for it. However, with the economic weakness, we are seeing futures come down dramatically on wheat and corn, and as a result, General Mills should benefit in 2012. General Mills is also one of the best-run food companies, so we like its prospects in 2012 and beyond.

Valassis (VCI)

Market Cap: $800M
Forward P/E: 5.2
PEG: 0.51

Valassis is a leader in the shared mail and Sunday inserts coupon business. Its stock is trading at a compelling valuation and is down dramatically over the last 6 months. However, consumers are still clamoring for more coupons, and Valassis is better positioned than its regional competitors in the shared mail segment. It does have issues in its Neighborhood division, as client budgets have shifted to digital from ROP advertising, but at this level, the stock has a compelling valuation. This one also may be ripe for a takeover or further industry consolidation.

NetFlix (NFLX)

Market Cap: $6.0B
Forward P/E: 17.6
PEG: 0.86

I saved the most controversial stock for last. Everyone knows about Netflix's trials and tribulations and its ongoing public relations issues. However, with the stock being down over 50% in the last few months, it is now a value play. Furthermore, its product and services are well positioned as the value leader in the entertainment category. Most pundits talk about competition in the movie segment, but in reality many consumers purchase it for older TV shows and series that they didn't get to watch the first time around. My family is just now enjoying old episodes of Lost, The X-Files, Mad Men and even The Cosby Show that we missed the first time around. At $7.99 for streaming only, it fits our need for cheap, convenient entertainment.

Source: 7 Defensive Stocks For A Weak Economy