In this article, we will look at the 12 Undervalued Defensive Stocks for 2026.
On March 20, John Kolovos, Macro Risk Advisors, appeared on CNBC’s ‘Closing Bell Overtime’ to talk about the state of the market and whether investors should be cautious. His caution predates Iran, and he said that he has been telling clients the same thing: bull markets look like bull markets and bear markets look like bear markets. This doesn’t necessarily look like a bull market, and is starting to look more and more like a bear market. He was of the view that the sequence of things is important, as we already have this initial decline lower coming down to support.
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We are probably going to get close to an exhaustive move, according to him, maybe at some point next week, maybe a sucker rally, and then put in that lower low. Kolovos further stated that it is important to remember that corrections unfold in three stages, initial move lower, which is what we have. We haven’t had that oversold bounce yet, and then we will get that broader swoosh lower, which may be around 6300 if not 6100.
With these broader market trends in view, let’s look at the best undervalued defensive stocks for 2026.
Our Methodology
We used the Finviz stock screener to compile a list of the best defensive stocks with a forward P/E below 15 and selected the top 12 most popular among elite hedge funds as of Q3 2025. We sourced the hedge fund data from Insider Monkey’s database. The stocks are ranked in ascending order of hedge fund sentiment.
Note: All data was recorded on March 23.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
12 Undervalued Defensive Stocks for 2026
12. Magnum Ice Cream Company N.V. (NYSE:MICC)
Magnum Ice Cream Company N.V. (NYSE:MICC) is one of the best undervalued defensive stocks for 2026. Goldman Sachs downgraded Magnum Ice Cream Company N.V. (NYSE:MICC) to Sell from Neutral on March 19, bringing the price target down to EUR 13 from EUR 13.70. The firm attributed the downgrade to very low visibility on cash generation and new top-line risk, noting that the company’s cold chain distribution requirements expose earnings to higher oil prices.
In its full year 2025 results, Magnum Ice Cream Company N.V. (NYSE:MICC) reported revenue of €7.9 billion (FY 2024: €7.9 billion), with 4.2% organic sales growth (OSG) year-on-year, as well as volume growth of +1.5% and price growth of +2.6%. Operating profit was €599 million, highlighting a planned net increase of €118 million in separation and restructuring costs in 2025 vs 2024 and the forex translation effect.
Magnum Ice Cream Company N.V. (NYSE:MICC) also reported an adjusted EBITDA margin 15.9%, which was impacted by forex translation effects and previously allocated depreciation costs.
Magnum Ice Cream Company N.V. (NYSE:MICC) manufactures and sells ice cream brands and products tailored for both at-home and away-from-home consumption. The company’s operations are divided into the following geographical segments: Americas, Asia, and the Middle East, Turkey, South Asia, and Africa (METSA).
11. Diageo plc (NYSE:DEO)
Diageo plc (NYSE:DEO) is one of the best undervalued defensive stocks for 2026. On March 2, Diageo plc (NYSE:DEO) was downgraded to Hold from Buy, with the firm setting a price target of 1,800 GBp. The firm attributed the downgrade to uncertainty over when the company’s U.S. volumes will bottom. It further told investors in a research note that Diageo plc (NYSE:DEO) lowered its fiscal 2026 guidance to reflect factors such as challenges in Chinese white spirits, a weaker-than-expected U.S. spirits category, and a weaker consumer in China.
The company’s 2026 interim results for the six months ended 31 December 2025, showed reported net sales of $10.5 billion, which declined 4.0% due to organic net sales decline and the negative impact of disposals. Diageo plc (NYSE:DEO) also reported that organic net sales declined 2.8%, driven primarily by organic volume down 0.9% and negative price/mix of 1.9%. In addition, strong organic net sales growth in Europe, Latin America and Caribbean (LAC), and Africa was more than offset by softer performance in North America.
Diageo plc (NYSE:DEO) is involved in the production and distribution of alcoholic beverages. Its brands include Johnnie Walker, Crown Royal, J&B and Buchanan’s whiskies, Smirnoff, Ciroc and Ketel One vodkas, Captain Morgan, Baileys, Don Julio, Casamigos, Tanqueray, and Guinness. The company’s operations are divided into the following geographical segments: North America, Europe, Asia Pacific, Latin America and Caribbean, Africa, and Corporate and Other.
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