Exxon Mobil Corporation (NYSE:XOM), another bullish bet of Cohen’s, looks to target production growth between 1-2% through 2016. The continued demand for oil and gas should drive demand, including the urbanization of emerging nations. Firm-specific operational opportunities for Exxon include better upstream exposure than its peers, and expansion into global natural gas operations. Exxon’s ability to generate large amounts of cash puts its dividend payout – which yields 2.7% – to only 20%. Mega-billionaire Bill Gates took a new position in Exxon last quarter of over 7.6 million shares (check out Bill Gates’ latest picks).
Abbott Laboratories (NYSE:ABT) has the lowest beta of Cohen’s five defensive stocks at 0.3. We also believe this drug makers offers the best value of the five. Abbott is looking to spinoff its research and development business in an effort to better focus its operations. Following the spinoff, the remaining healthcare business is expected to grow sales by 5% in 2013. Shares currently trade at 16x earnings, but only 13x forward earnings. Abbot’s legacy business should see secular growth thanks to a rising population and the aging of the baby boomer generation. Abbott called Jim Simons and Steven Cohen among its top investors last quarter, helping make it one of the top ten-pharma stocks loved by hedge funds (see all 10 here).
We believe that Cohen’s defensive picks should help position his portfolio for downside economic pressures, and they also offer investors relative stability in an unstable market. All of Cohen’s picks have exposure to markets that will grow nicely in the coming years, and many pay a dividend that provides investors with income, should operations remain pressured for longer than expected.