Goldman Sachs has identified 23 healthcare and consumer staples stocks with defensive characteristics as investors prepare for slower earnings growth and a potentially more challenging market in 2027.
Tyson Foods, CVS Health, Kroger, Merck and Abbott Laboratories stand out from the group for investors watching companies with established demand and strong free cash flow relative to sector peers.
Defensive stocks are drawing renewed attention as concerns about market concentration and higher interest rates challenge the outlook for US equities. Goldman Sachs strategists led by Ben Snider recently highlighted a group of companies with comparatively low share-price volatility and high free cash flow yields, according to Business Insider’s report.
The list includes businesses selling everyday food products and companies supplying medicines or healthcare services. Their products and services can maintain demand through economic slowdowns, although that does not guarantee stable earnings or share prices.
Five Defensive Stocks to Watch Before 2027
1. Tyson Foods (TSN)
Tyson Foods is one of the food producers included in Goldman Sachs’ defensive stock screen. Its business spans chicken, beef, pork and prepared foods, giving it exposure to products that remain part of household grocery spending.
Goldman’s screen, reported by Seeking Alpha, listed Tyson with a trailing four-quarter free cash flow yield of 11%. That measure compares the cash a company generates after capital spending with its market value. It can help investors assess cash generation relative to a stock’s price, but it does not establish that the shares are undervalued.
Investors should also monitor livestock costs, operating margins and changes in consumer demand.
2. CVS Health (CVS)
CVS Health combines pharmacy operations with healthcare services and insurance through its business units. Pharmacy and medical needs can be less sensitive to economic cycles than discretionary purchases.
Goldman’s screen showed CVS with a trailing four-quarter free cash flow yield of 9%. However, investors also need to weigh reimbursement pressure, healthcare costs and the company’s ability to manage its insurance business profitably.
3. Kroger (KR)
Kroger operates grocery stores that sell essential household products. Grocery spending can remain comparatively resilient during downturns, although shoppers may switch to cheaper brands or reduce spending on higher-margin products.
Goldman’s analysis listed Kroger with an 8% trailing four-quarter free cash flow yield. Competition from Walmart and other grocers remains important, along with food inflation and the company’s ability to protect margins.
4. Merck & Co. (MRK)
Merck & Co. is a pharmaceutical company with a portfolio of prescription medicines and vaccines. Healthcare demand can offer some insulation from changes in consumer spending, while new drug approvals and clinical results can provide opportunities for growth.
Goldman’s defensive screen placed Merck among its healthcare selections, with a trailing four-quarter free cash flow yield of 5%. Investors should still consider patent expirations, research and development risks and the company’s ability to replace revenue from medicines facing generic competition.
5. Abbott Laboratories (ABT)
Abbott Laboratories operates across medical devices, diagnostics, nutrition and established pharmaceutical products. Its presence in several healthcare categories provides different sources of demand rather than relying on a single product line.
Goldman’s screen reported a trailing four-quarter free cash flow yield of 5% for Abbott. The company’s performance still depends on product demand, regulatory developments and execution across its businesses.
Investors comparing these names with other stocks and investing opportunities should assess earnings trends, valuation and balance-sheet strength rather than relying on a defensive label alone.
Why Defensive Stocks Could Matter More in 2027
Goldman Sachs expects US corporate earnings growth to moderate in 2027. Its strategists have also warned that a narrow market rally and elevated interest rates could leave investors more exposed to declines in highly valued growth stocks. The bank’s screen focuses on healthcare and consumer staples companies with relatively low realized volatility and stronger free cash flow yields than sector peers.
The renewed interest in defensive shares comes amid broader debate over market leadership. Investors following the stocks driving Wall Street’s rally may want to compare the concentration of growth-oriented holdings with businesses tied to recurring consumer and healthcare demand.
Dividend income is another consideration, but a high yield alone is not evidence of safety. Investors should examine whether a company generates enough cash to fund its dividend and planned investment. The same principle applies when comparing defensive businesses with established income payers such as PepsiCo.
Defensive stocks can also underperform when investors favor faster-growing companies or when higher borrowing costs weigh on valuations. Healthcare firms face regulatory and product risks, while food retailers and producers must manage costs and competitive pricing.
Goldman Sachs’ list is therefore best treated as a starting point for research rather than a ranking of guaranteed winners. For investors positioning portfolios ahead of 2027, the central questions remain whether each company can sustain cash generation, protect its margins and justify its current valuation.