Stocks regarded as defensive plays are in this weekend's stocks to watch as they try to stay above the fray of the intense selling across the stock market. TJX Cos., T-Mobile US, Southern Co., Quest Diagnostics and Aon have been holding up relatively well and are in base patterns.
The stock market is in a sharp correction, so it's best to avoid new purchases for now. Instead, consider adding these stocks to a watchlist. Even these resilient names buckled somewhat as the heavy selling continued Friday.
In the current weak market, IBD suggests stocks with average true range (ATR) of 3% or lower. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior.
Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs. IBD suggests stocks with ATRs of 3% or below.
TJX Seen Benefiting From Disruptions
TJX Cos. is forming a double-bottom base. The stock briefly poked above the 127.58 buy point in Friday's trading before reversing lower. The relative strength line has jumped to new highs, a good sign as the stock itself tries for new highs.
Shares of the discount apparel chain, Friday's IBD Stock of the Day, bucked heavy selling and rose 3.3% for the week, even with Friday's 2.6% drop.
Citigroup on Thursday upgraded TJX to buy from neutral, citing favorable trends for the industry. Disruptions caused by President Donald Trump's tariffs should increase the availability of products to off-price retailers at attractive prices, Citi said. Weakening consumer conditions could be another tailwind.
The parent company of T.J. Maxx, Home Goods and Marshalls stores owns the highest Composite Rating of 35 companies in the apparel retail industry group. It also has group's best Relative Strength Rating, at 88. TJX is one of the few stocks in the group trading above the 10-week moving average.
Earnings and sales growth were in the single digits the past four quarters. Its three-year EPS growth rate is 15% and three-year sales growth rate is 6%, according to IBD Stock Checkup. Analysts expect full fiscal year earnings to climb 4.5% on a 2.6% rise in sales, per FactSet.
The stock has an ATR of 2.21%.
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T-Mobile Tests Critical Chart Level
T-Mobile US fell below its 50-day moving average on Friday, diving 7.4% to undercut the low of a brand-new flat base. The buy point is 276.49. The flat base sits atop an earlier cup base, in what can be described as a base-on-base formation.
The relative strength line is already making new highs, a good sign in the event the stock breaks out to new highs.
T-Mobile is the No. 1 stock in the wireless services industry group. The group — often viewed as a defensive play — has climbed about 10% this year to No. 4 in IBD's 197 industry group rankings.
The operator of T-Mobile and MetroPCS is the U.S. subsidiary of Deutsche Telekom.
In the fourth quarter, the company grew postpaid customers by 1.9 million, the highest in the industry. It also forecast 2025 net customer additions of 5.5 million.
Q4 sales and earnings growth accelerated for a third straight quarter as results beat analysts' expectations. The stock jumped more than 6% when results came out Jan. 29.
T-Mobile stock, which is in the IBD Big Cap 20, has an ATR of 2.39%.
Stocks To Watch: Southern Near New Highs
Southern Co. is forming a cup-with-handle base with a 93.48 buy point. Shares tested that entry Friday morning, but reversed lower. The RS line is making new highs, and the up/down volume ratio is a bullish 1.5.
The Atlanta-based utility provides electric and natural gas service in Georgia, Alabama and other Southeastern states. And like most utilities, the stock is benefiting from a rotation toward defensive and higher-dividend stocks.
Utilities aren't known for big growth. Southern's three-year EPS growth rate is 6% and the three-year sales growth rate is 2%.
But a rush to build data centers that consume massive amounts of energy drew investors to electricity providers, including nuclear power. Southern's energy sources include nuclear plants.
In its latest earnings presentation, Southern noted a "growing pipeline of potential
new electric demand" as it raised its annual revenue growth forecast from 6% to 8% through 2029.
The utility guided 2025 adjusted EPS to $4.20-$4.30 a share, an increase of 6% at the midpoint. The consensus analyst estimate for the full year is $4.29, up 6%.
Southern's ATR is 1.85%.
Stocks To Watch: Quest At Key Level
Quest Diagnostics fell below the 10-week moving average but appears to be forming a flat base. The still-in-progress flat base is forming next to the top of a prior cup base.
The relative strength line has surged since mid-January and is at 52-week highs.
The stock was up as much as 4% for the week but erased the entire gain amid broad selling, finishing 3.8% lower. Quest stock formed and cleared four bases since last year, but the stock has climbed no more than 9% from each breakout. Thus, the stock is in an early-stage base.
The provider of diagnostic testing such as blood and urine exams tends to have a steady business. Sales growth accelerated from 2% to 3%, 8% and 15% the past several quarters, according to MarketSurge.
The company won a court decision this week, when a federal court ruled that laboratory-developed tests will not be subject to the same compliance measures mandated for in-vitro diagnostic products. The ruling overturns a rule put into place by the Food and Drug Administration.
Regulatory concerns, remain, however. At its investor day in March, the company noted a potential $100 million impact from the Protecting Access to Medicare Act, which will cut Medicare payments by up to 15% for 800 lab services when it goes into effect. The company had earlier expected a $10 million hit.
Analysts expect Quest — the No. 3 stock in the medical services industry group — to increase earnings 8.5% this year to $9.69 a share. Sales are seen rising 9.2% to $10.783 billion, according to FactSet.
The ATR is 2.34%.
Stocks To Watch: Aon Forms Base
Ireland-based insurance broker Aon was below its 50-day moving average Friday amid another broad sell-off in global stock markets. Yet, the stock is forming a flat base with a 412.97 buy point.
Shares are 5% below the previous buy point, a 395.33 entry from a cup without handle.
AON had been trading tightly right around that entry for several weeks before Friday's sell-off.
Despite that it broke an important moving average, the relative strength line is already making new highs.
Aon is not known for big growth. Its three-year EPS and sales growth rates are only 8%, according to the IBD Stock Checkup. But the stock is in the No. 4-ranked Insurance sector, still up nearly 9% year to date.
Aon has a Composite Rating of 97, fifth-highest in the insurance brokers industry group. MarketSurge shows return on equity of 125% and cash flow from operations of $18.53 a share, or 19% above 2024 earnings of $15.60 a share.
The firm's earnings rose 10% in 2024 and analysts expect another 10% increase in earnings per share this year, according to FactSet.
Aon's ATR is 1.69%.
