Is This Another Overbought Defensive Stock (and a Relative Bargain)?

We’ve mentioned that Jack Hough, in the Wall Street Journal, argued that jittery investors have driven up the price of defensive stock to indefensible levels. He compared the defensive stock General Mills (GIS) to the more cyclical Caterpillar (CAT) as an example of that.

GIS PE Ratio Chart

GIS PE Ratio data by YCharts

We took to the YCharts Stock Screener to see what other overbought defensive stocks we could find -- like Kimberly Clark (KMB), whose earnings trade at 1.6 times that of CSX (CSX).

KMB PE Ratio Chart

KMB PE Ratio data by YCharts

Kimberly Clark is a classic defensive stock. The company makes Huggies, Kleenex, and Cottonelle toilet paper, among other staples. Investors know that in the toughest of times, shoppers will still need toilet paper, hence the premium.

Meanwhile CSX, a big railroad company with 21,000 miles of track. The economy has a big impact on how much freight companies transport, making this more of a cyclical buy.

CSX has a higher profit margin.

KMB Profit Margin Chart

KMB Profit Margin data by YCharts

And its return on equity, while lower, has risen more.

KMB Return on Equity Chart

KMB Return on Equity data by YCharts

KMB Return on Equity Chart

KMB Return on Equity data by YCharts

But investors have piled into Kimberly Clark.

KMB Chart

KMB data by YCharts

YCharts Pro gives CSX strong scores and considers it undervalued, perhaps a bargain overlooked by investors playing defense.

From the editors of YCharts.YCharts Pro Investor Service includes professional stock charts, stock ratings and portfolio strategies.



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