Top 5 defensive stocks to watch in 2025

What are defensive stocks?

Defensive stocks refer to companies within certain industries or with proprietary technologies that are mostly impervious to economic peaks and valleys. They tend to operate positively, even during economic downturns, because they provide products or services that consumers need, regardless of fiscal conditions.

Characteristics of defensive stocks

Defensive stocks can’t be categorised into one sector or by size (although most of them tend to be blue-chip stocks), but they do share numerous characteristics, such as:

• Reduced volatility: Because these stocks are more resistant to the highs and lows of the market, they tend to experience lower volatility in their stock values
• Financial planning: It can be easier for stock traders to plan financially due to the typically stable nature of these shares
• Liquidity: These stocks tend to be blue-chip, or close to it, so they’re frequently traded
• Media coverage: Because they’re such monoliths in their industries, the media tends to cover them more, giving traders plenty of information to learn about these companies

What sectors are classified as defensive stocks?

There are a few sectors that can be classified as defensive stocks. However, remember that all stocks can experience downturns or stagnation. Just because a stock is considered defensive doesn’t mean it’s entirely impervious to all economic conditions – it just has a greater ability to be so.

• Healthcare: People need basic healthcare regardless of economic turmoil
• Utilities: Think water, gas and electricity. Also consider waste management, which is always needed
• Consumer staples: These would be items like groceries and personal care
• Telecommunications: Essential connectivity tends to withstand market downturns

Why trade defensive stocks?

Defensive stocks can be a good option to trade if you’re looking to balance your portfolio with more stable shares. While all trading is risky, it helps to invest in some stocks that tend to weather the market’s conditions, giving you greater security in your portfolio.

Risks of defensive stocks

Here are two pitfalls of trading defensive stocks:

• Not invincible: It’s easy to get caught up in the hype of defensive stocks and their potential ability to withstand headwinds, but they’re not invincible to economic conditions
• Smaller gains: Because they tend to have less volatility than, say, cyclical stocks, the potential for big profits is lower on defensive stocks

Top 5 defensive stocks to watch in 2025

We selected these defensive stocks based on their geographic diversification, recent six-month performance and positions in typical defensive sectors. In our list are stocks based in Canada, the US, Asia and the UK, across groceries, beauty, healthcare, packaged foods and dairy processing.

Overview of the defensive stocks in this article

You can CFD trade all the stocks in our article with IG UAE, and outright buy Estée Lauder, Lamb Weston and Tesco shares via stock trading with us.

1. Ascentage Pharma Group International (HKG: 6855)

Industry: Healthcare

Market cap: HKD 31.78 billion¹

Ascentage Pharma Group takes an integrated approach to its model – it handles everything from early-stage research through to commercial distribution, giving it greater control over its pipeline and margins.

The company's core business revolves around discovering, developing and commercialising novel targeted therapies for cancer patients. Its flagship product, Olverembatinib, is a breakthrough in treating certain blood cancers and has become its primary revenue driver.

Recent months have been transformative for Ascentage. The commercialisation of Olverembatinib gained significant traction in 2024, leading to increased sales of the therapy by 93%,² primarily because of its inclusion in China’s National Reimbursement Drug List (NRDL).

Highlights:

• Over the past six months, its stock price has grown 106.91%, as of 25 August 2025
• Research and development (R&D) expenditure increased 19% for the six months ending June 2025, indicating the company’s dedication to expansion³
• Its Lisaftoclax therapy was approved by the National Medical Products Administration (NMPA) of China, which demonstrates Acsentage’s ability to carry out its business model from clinical development to approval⁴

2. The Estée Lauder Companies Inc (NYSE: EL)

Industry: Beauty

Market cap: US$31.91 billion⁵

Estée Lauder operates a diverse portfolio of luxury beauty brands, including MAC, Clinique, Too Faced, La Mer and Tom Ford Beauty. The company dominates three main categories: skincare (its largest segment), makeup and fragrance.

Its business model focuses on premium positioning, with products sold through high-end department stores, specialty retailers and, increasingly, through digital channels.

The company initially withdrew its fiscal 2025 outlook amid uncertainty in mainland China and Asia travel retail markets, but has since reaffirmed its plans to restore positive sales growth in FY26.  

It continues to invest heavily in digital transformation and direct-to-consumer channels while working to stabilise performance in key Asian markets that remain crucial to its long-term growth prospects.

Highlights:

• As of 25 August 2025, its stock price has grown by 21.02% over the preceding six months
• While its latest earnings report shows an overall decline in financial results, traders who believe its fundamentals remain strong might be able to get the stock at a good price, despite its half-year increase. The key is viewing current headwinds as a cyclical downturn in a structurally sound defensive business, not a permanent decline

3. Lamb Weston Holdings Inc (NYSE: LW)

Industry: Packaged foods

Market cap: US$7.80 billion⁶

Lamb Weston supplies major restaurant chains, including McDonald's, serves retail grocery stores with branded and private-label products, and exports globally.

What began as a small regional operation has grown into North America's largest frozen potato products producer, spinning off from ConAgra Foods in 2016 to become an independent public company.

Its competitive advantage lies in its scale, processing efficiency and long-term relationships with both potato growers and major food service customers.

The company operates processing facilities across North America and internationally, handling everything from sourcing raw potatoes to delivering finished products.

Despite economic headwinds, Lamb Weston announced its ‘Focus to Win’ strategy, which aims to deliver a minimum of US$250 million in savings, among other efforts.

Highlights:

• Lamb Weston’s stock price has grown by a decent 7.84% over the past six months, with volatility seen in between. This is as of 25 August 2025
• According to Morningstar, the stock price is trading at a 31% discount to its fair value estimate⁷
• In its latest earnings release, net sales increased by 4%, versus the previous year quarter⁸

4. Tesco PLC (LON: TSCO)

Industry: Groceries

Market cap: £27.70 billion⁹

Tesco is the UK's largest retailer and one of the world's leading grocery chains.

The company operates a multi-format retail business centred around grocery stores, ranging from large hypermarkets to convenient neighbourhood express stores.

Beyond groceries, it offers general merchandise, clothing through its F&F brand and financial services through Tesco Bank.

The company has also invested heavily in digital infrastructure, with solid online delivery and click-and-collect services. Their Clubcard loyalty programme creates valuable customer insights while driving repeat purchases.

Tesco operates primarily in the UK and Ireland, having streamlined its international footprint in recent years to focus on its core markets.

Highlights:

• Its stock price has grown by a healthy 13.47% in the six months preceding 25 August 2025
• Sales were up across the Group as of June 2025 compared to the previous quarter¹⁰
• In the same period, it launched 350 new products, displaying the company’s commitment to growth and expansion¹¹

5. Saputo Inc (TSE: SAP)

Industry: Dairy processing

Market cap: CAD 4.79 billion¹²

Saputo operates as a leading dairy processor with operations across Canada, the US, Australia and Argentina.

The company produces, markets and distributes a wide range of dairy products, including cheese, fluid milk, yogurt, dairy ingredients and specialty products. Its business model focuses on operational efficiency, strategic acquisitions and maintaining strong relationships with both dairy farmers and retail customers.

Saputo serves diverse markets from retail grocery chains to food service operators and industrial customers who use their ingredients in food manufacturing.

Its recent financial performance demonstrates how it's resistant to economic uncertainty.

The company continues to expand its higher-margin specialty products while investing in automation and efficiency improvements across its processing network.

Highlights:

• In the six months preceding 25 August 2025, its stock price grew by 31.19%
• Generated year-over-year (YoY) growth in adjusted EBITDA in Canada, the US and Europe according to its latest earnings report¹³
• Revenues were up 4.6% over the same period¹⁴

How to trade defensive stocks with IG UAE

CFDs

1. Open a CFD trading account with IG UAE
2. Search for defensive stocks on the IG platform
3. Decide whether to go long (buy) or short (sell)
4. Choose your position size
5. Set stop-loss and limit orders
6. Place your trade and monitor it

Stock trading

1. Open a stock trading account with IG UAE
2. Search for defensive stocks
3. Choose the stock you want to buy – try our stock screener
4. Determine how many shares you want to purchase
5. Place your order
6. Monitor your investment and collect any dividends

FAQs about defensive stocks

Footnotes

1. TradingView, August 2025
2. Ascentage Pharma earnings, June 2025
3. Ascentage Pharma earnings, June 2025
4. Ascentage Pharma earnings, June 2025
5. TradingView, August 2025
6. TradingView, August 2025
7. Morningstar, August 2025
8. Lamb Weston earnings report, July 2025
9. TradingView, August 2025
10. Tesco earnings report, June 2025
11. Tesco earnings report, June 2025
12. TradingView, August 2025
13. Saputo earnings report, June 2025
14. Saputo earnings report, June 2025