We Avoided the Cliff: But Now Will We Bump Our Heads on the Ceiling?

By Joseph Harry - January 4, 2013 | Tickers: KO, HNZ, SJM, SYY | 0 Comments

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The market applauded the partially-resolved fiscal cliff deal, as it jumped over 300 points on Wednesday. This excessive optimism, however, should come with more caution. The dreaded debt ceiling deadline will soon be approaching, and the cliff deal reached by Washington hasn't really outlined any significant spending cuts. Moody's has already came out and said that the fiscal cliff deal doesn't eliminate the threat of a credit downgrade to the United States' credit rating. Moody's sees the ratio of debt to economic output remaining at a high of about 80% in 2014 to the upper 70% range for the rest of the decade, and feels that additional steps need to be taken. Fitch ratings also reiterated its negative outlook last week, as cited by the Los Angeles Times. It may be wise to be safe at this point, rather than sorry. Defense may still be the best offense.

Defensive Plays For 2013:

• The J.M. Smucker Company (NYSE: SJM) engages in manufacturing and marketing branded food products primarily in the United States, Canada, and internationally. The company’s product portfolio includes coffee, peanut butter, fruit spreads, shortening and oils, baking mixes and ready-to-spread frostings, canned milk, flour and baking ingredients, juices and beverages, frozen sandwiches, toppings, syrups, and pickles and condiments. 
• H. J. Heinz Company (NYSE: HNZ), together with its subsidiaries, manufactures and markets food products for consumers, and foodservice and institutional customers in North America, Europe, the Asia Pacific, and internationally. Its principal products include ketchup, condiments and sauces, frozen food, soups, beans and pasta meals, infant nutrition, and other food products. 
• Sysco Corporation (NYSE: SYY), through its subsidiaries, engages in the marketing and distribution of a range of food and related products primarily to the foodservice or food-away-from-home industry. The company distributes a line of frozen foods, such as meats, fully prepared entrees, fruits, vegetables, and desserts; a line of canned and dry foods; fresh meats; dairy products; beverage products; imported specialties; and fresh produce. It also supplies various non-food items, including paper products, such as disposable napkins, plates, and cups; tableware comprising china and silverware; cookware consisting of pots, pans, and utensils; restaurant and kitchen equipment and supplies; and cleaning supplies.
• The Coca-Cola Company (NYSE: KO), engages in the manufacture, marketing, and sale of nonalcoholic beverages worldwide. The company primarily offers sparkling beverages and still beverages.

 

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