Defensive Stocks Are in Season This Winter... Which Stocks Are Recommended? [Weekend Money]

"Food and Beverage Stocks Have a Solid Floor"
Growth-Oriented Defensive Picks:
KT&G and Samyang Foods

Market analysts have said that the food and beverage sector is well suited to defensive investing.

Choi Go-woon, an analyst at Korea Investment & Securities, said in a report titled "Prepare for Winter with Defensive Stocks" that "interest is growing in defensive stocks that can weather recent stock market turbulence" and that "investors should focus on the food and beverage sector, where share prices have a solid floor."

According to Choi, food and beverage is a major consumer staples industry, and after a downturn lasting more than three years, it has reached the bottom and is beginning to recover. Given the industry's clear limitations and the many headwinds it has faced, Choi believes there is relatively little left to lose by investing in food and beverage stocks. He added, "Uncertainty will ease with third-quarter results, and the base effect is set to return in the fourth quarter. Since the market is looking for defensive stocks that can grow, we recommend KT&G and Samyang Foods as our top picks in the food and beverage sector."

Choi described KT&G as a model dividend-growth stock, saying that it is expected to post record operating profit this year and that growth in overseas earnings is beginning to accelerate. With its capacity expansion cycle also complete, the company has surplus cash equivalent to half of its total dividend payout last year, he said, forecasting that its dividend capacity will grow structurally as its own cash flow improves.

In Samyang Foods' case, Choi said the share price already reflects concerns about slowing exports due to factors such as a weaker exchange rate and logistics disruptions. He stressed that once uncertainty over third-quarter results clears, investors should focus on strategies to offset currency risks, including overseas price increases. "The key to growth is the strength of the Buldak products themselves," he said. "Current market expectations assume that the utilization rate at the Jiaxing plant in China next year will be lower than the first-year results of the Miryang Plant No. 2, leaving greater upside potential ahead."

This content was produced with the assistance of AI translation services.