McDonald's, Hormel, other defensive stocks thrive

By Matt Krantz, USA TODAY

Investors are finding comfort in shares of tried-and-true companies and pushing many of them to all-time highs.

While the stock market at large is still struggling to regain its footing, and the Standard & Poor's 500 remains 28% below its peak set in 2007, 27 S&P 500 stocks are at or just 5% away from setting record highs, according to a USA TODAY analysis of data from S&P's Capital IQ.

These stocks at highs reflect investors' caution, as they are predominantly of companies with low-glitz-but-predictable businesses in markets insulated from the economy's ups and downs, such as Hormel (HRL), McDonald's (MCD) and Ball (BLL).

"In the go-go years, it was the highflying and risky stocks that paid off," says Jack Ablin of Harris Private Bank. "Now it's the predictable, down-and-dirty and not-very-glamorous stocks that are."

A closer examination of the handful of stocks at or near all-time highs shows investors are valuing:

•Back to basics. Stocks connected to consumers cutting spending are big winners. That includes processed-meat maker Hormel, discount retailer Family Dollar (FDO) and McDonald's, which is taking business from more expensive restaurants.

Another example is O'Reilly Automotive (ORLY), which set a new high Thursday. The company sells car parts, critical for consumers who are pushing their old cars further rather than buying new ones, says Tony Cristello, analyst at BB&T. Rival AutoZone (AZO) is also near an all-time high.

•Stability. Medical-waste-disposal company Stericycle (SRCL), logistics firm C.H. Robinson (CHRW) and canmaker Ball share a common trait: They've insulated themselves from the economy's swings.

Stericycle has long-term contracts with hospitals, and medical services are needed even in a sluggish economy, says Jefferies' Richard Close. Ball continues to plow ahead as the company focuses on beverage cans, says Robert W. Baird's Ghansham Panjabi. And C.H. Robinson's business has been steady as it can shrink costs along with demand, S&P's Jim Corridore says.

•Dividends. Wisconsin Energy (WEC) and other utilities are a hit with investors seeking rising dividends, says Gabelli's Tim Winter.

The stocks hitting new highs now show investors have been scarred by the market's volatility and poor performance the past decade. "Investors have given up the day-trading mentality," Winter says. "Now they want to preserve capital and, to the degree they can, have investment dollars grow."

Stocks within 5% of their all-time highs

Company (exchange: ticker) All-time high Close 9/16

O'Reilly Automotive Inc. (NasdaqGS: ORLY) $51.70 $51.66

Hasbro Inc. (NYSE: HAS) $44.60 $44.43

Airgas Inc. (NYSE: ARG) $67.60 $67.30

Intuit Inc. (NasdaqGS: INTU) $45.10 $44.87

Ball Corporation (NYSE: BLL) $60.00 $59.71

Stericycle, Inc. (NasdaqGS: SRCL) $70.20 $69.66

CH Robinson Worldwide Inc. (NasdaqGS: CHRW) $68.40 $67.84

Apple Inc. (NasdaqGS: AAPL) $279.00 $276.57

Yum! Brands, Inc. (NYSE: YUM) $46.30 $45.82

Hormel Foods Corp. (NYSE: HRL) $44.80 $44.28

AutoZone Inc. (NYSE: AZO) $221.60 $218.89

Discovery Communications, Inc. (NasdaqGS: DISC.A) $42.10 $41.56

Ventas Inc. (NYSE: VTR) $53.50 $52.82

W.W. Grainger, Inc. (NYSE: GWW) $118.50 $116.75

Cognizant Technology Solutions Corp. (NasdaqGS: CTSH) $64.50 $63.53

Mead Johnson Nutrition Company (NYSE: MJN) $57.10 $56.15

Wisconsin Energy Corp. (NYSE: WEC) $58.00 $56.98

Teradata Corporation (NYSE: TDC) $35.40 $34.68

Amazon.com Inc. (NasdaqGS: AMZN) $151.10 $148.13

McDonald's Corp. (NYSE: MCD) $76.30 $74.80

Philip Morris International, Inc. (NYSE: PM) $56.30 $55.11

Nike Inc. (NYSE: NKE) $78.60 $76.64

Family Dollar Stores Inc. (NYSE: FDO) $44.10 $42.96

McCormick & Co. Inc. (NYSE: MKC) $42.10 $40.97

Clorox Corporation (NYSE: CLX) $69.40 $66.87

DaVita, Inc. (NYSE: DVA) $67.40 $64.71

Salesforce.com (NYSE: CRM) $122.00 $116.92
Source: S&P Capital IQ

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