The Wall Street Journal argues that the stock market drop may have killed so many sectors that "defensive stocks" may have disappeared. In many market corrections, there are some companies with shares that have held up because their business are less likely to be hurt by a recession.

The paper says that "a number of defensive stocks lately are acting more like cyclical names." The analysts points to companies such as PepsiCo (NYSE:PEP) and Johnson & Johnson (NYSE:JNJ).

The viewpoint may be flawed. What may have happened is that there has been a rotation out of stocks that used to do well in bear markets to a new set of shares which have held up well.. Over the last year, shares of Wal-Mart (NYSE:WMT) are up over 20%. Shares in Colgate (NYSE:CL) are only off a little over 10%, but the company pays a 2.3% dividend. Shares in Genentech (NYSE:DNA) are up 20%. Granted, it is a takeover target, but it has been considered one for some time.

Maybe The Wall Street Journal is just looking in the wrong places.

Douglas A. McIntyre is an editor at 247wallst.com.

It's a slow week on Wall Street. But after the year we've had (for a great read, check out Markets Gone Wild: 10 Craziest Days on Wall Street in 2008), that's a welcome change.

However, there are some individual stories worth noting. One in particular that caught my eye was the action in Walgreen Co. (NYSE: WAG).

Before the opening bell on Monday, the giant drug store announced earnings that missed expectations.

Investors were not pleased and shared immediately sold off. By the end of the day, shares had shed another dollar of value. The bleeding continued on Tuesday with another dollar lost. Shares closed Wednesday at just over $24.

While it may have been a good week to announce negative news, WAG could not escape the wrath of the sell-first-ask-questions-later crowd.

Does this make any sense?

Not to me.

Walgreen announced that it made $408 million, or 41 cents per share, in its first quarter of fiscal year 2009, ending Nov. 30. Analysts were expecting 46 cents per share.

The miss continues a trend of slower profit growth for what had been one of the more consistent companies in the S&P 500 index.

I guess that explains the disappointment over the earnings miss, but I find the reaction a bit ridiculous.

The economy is in a world of hurt, so it should have been no surprise that even a dependable earnings machine like WAG would have trouble.

The sell-off is your opportunity, in my opinion. There are plenty of great long-term reasons to own the stock.

For starters, in a poor economic environment, WAG can be counted as a defensive play. That status does not change due to a 5-cent miss on earnings.

The company is profitable and has a solid balance sheet with $400 million in cash and just over $1 billion of debt. They pay a nice dividend of just under 2% that investors should be able to count on while we wait for the economy to find its footing.

Like every other stock in the market, WAG has seen its share price drop during the last year. That said, the stock has fared better than some, having only lost about 38% of its value.

With many questions remaining about the economy, I would much prefer owning WAG than some other names with greater risk.

The company did announce that it was reducing store openings for the coming year, focusing on cutting costs and redesigning stores in order to increase grocery items for busy shoppers.

The later strategy makes a lot of sense if you think about what is working for other retailers, like Wal-Mart (NYSE: WMT), or gasoline convenience stores like Casey's General Store (NASDAQ: CASY).

Filling a prescription is no different than filling the gas tank. If a customer can pick up a gallon of milk and some other items while waiting for a prescription to be filled, WAG will benefit by offering more choices.

WAG makes a ton of sense as a defensive play, and I would consider it a buy.

Jamie Dlugosch is a contributor to OptionsZone.com.

The U.S. economy remains weak - - grappling with its most severe recession in decades. Credit remains tight, although U.S. government interventions have stabilized the financial system (so far). Further, there are major public policy unknowns: a new administration, the Obama Administration, takes office in January 2009 - - a reality that could substantially alter the investing landscape.

Now is not the time to establish new positions in stocks or add to positions, so says Stock Analyst C. Leonard Bauer.

Still, investors, being a risk-taking lot, sometimes just can't heed the advice to remain sidelined. They're like children seeking to open a gift before the holiday arrives, and because the good C. Leonard does not want to be viewed as a new Ebenezer Scrooge, he offered the following defensive plays heading into the new year.

Heads up: Bauer would buy shares in only one of the following defensive plays:

AT&T (NYSE: T). Price: $27.90, p/e: 12. Simply, 'Ma Bell' has what it takes to survive the economic downturn - - one that's likely to thin the communications field, Bauer said. A global footprint, and ample engineering / research talent also means T will be well-positioned for Web 2.0's big growth period, as the U.S. economy recovers.

"While many firms are struggling to survive, a lucky minority are built to weather the storm better," says growth stock specialist Karim Rahemtulla. In Xcelerated Profits Report, he eyes Costco Wholesale (NASDAQ: COST).

"Thanks to rising inflation and unemployment, coupled with a beaten-up economy, many retailers are braced for a harsh new reality this holiday season.

"Consumers have much tighter budgets and are cutting back on whatever they can. And that's where some 'one-stop' retailers like Costco can really take advantage.

"Although customers are more likely to avoid the electronics and other non-necessity stocking sections of the store these days, they still need to eat.

"So while other non-food departments are seeing a sales slowdown, Goldman Sachs recently reported that Costco is likely to enjoy strong food sales, which offset that.

"Goldman also noted that Costco boasts a strong balance sheet, with almost $3.3 billion in cash on the books, plus ample liquidity - factors that could encourage management to implement a stock buyback program.

"Compared to other retailers who are flat-out dreading this holiday season, that puts Costco in a strong position.

"And because the store has such a diverse range of products, all under one roof and available at bargain prices, Costco is one firm better prepared to ride out what could be a brutal season for retailers."

Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.

"Even in tough economic times, Sara Lee (NYSE: SLE) should fair well thanks to its offering of non-cyclical goods," says quantitative analyst Vahan Janjigian, editor of The Forbes Growth Investor.

"Sara Lee is a leading producer of branded foods, beverages, and personal care products. Roughly 50% of sales are generated outside of the U.S. Leading brands include Ball Park, Hillshire Farm, Jimmy Dean, Sara Lee, State Fair, Earth Grains, and Senseo brand coffee products.

"Management launched a comprehensive restructuring plan in 2005 to focus on core products and maximize operating efficiencies. These actions yielded $218 million in annualized cost savings in fiscal 2008.

"Food commodity costs soared earlier this year. However, SLE has been able to pass costs to customers through price increases. Furthermore, it has benefited from growing volumes. Fiscal Q4 net sales grew 12.2% year-over-year to $3.5 billion.

"With its earnings announcement, management issued fiscal 2009 guidance. It expects net sales to grow 4-6% year-over-year to $13.7-14 billion and pro forma earnings to grow 8-18% to 90-98 cents per share.

"Since issuing guidance, economic conditions have deteriorated significantly. This could lead to increased trading down activity to lower-priced brands or private-label goods.

"Also, the strengthening dollar has turned the foreign exchange tailwind into a headwind. Yet food commodity and energy costs have fallen significantly, which could provide margin relief for the company."

Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.

"Church & Dwight Co. (NYSE: CHD) continues to do well what it has done since 1846: sell baking soda," notes Tracey Ryniec, who has chosen the stock as the latest Zacks Elite Stock of the Day.

The advisor explains, "In these turbulent financial times, investors have been turning to companies with a long track record of selling essential name-brand products and Church & Dwight is one of those companies.

"Church & Dwight is a consumer products company which produces, among other things, ARM & HAMMER baking soda, dental care toothpaste and Super Scoop Clumping Cat Litter.

"It has also been on an expansion tear in this decade. In 2001, the company acquired USA Detergents, Inc. and the laundry brands XTRA and Nice'N Fluffy.

"The expansion continued later that year when CHD acquired Carter-Wallace, Inc, which had brands such as Arrid Antiperspirant, Trojan Condoms, Nair Depilatories and First Response Home Pregnancy and Ovulation Test Kits.

"Investors should be well rewarded in the coming years by buying with major U.S. defense companies at current prices," says Gregory Dorsey.

The contributing editor to Stephen Leeb's Income Performance Letter explains, "The U.S. has more than doubled our sales of armaments to foreign nations over the past three years. And regardless of who wins the election, we expect this to continue."

"We're adding one for growth and income to our portfolio now. Lockheed Martin (NYSE: LMT) is a premier defense contractor. It's best known for its fighter jets.

"For example, Lockheed is now developing the F-35, also known as the Joint Strike Fighter, the replacement for the current generation of front-line fighters.

"But the company is actually engaged in four broad business areas, each of which should enjoy strong growth for years to come.

Consumer-products company Kimberly-Clark (NYSE: KMB) was the latest company to see its stock placed on the chopping block. That's been happening a lot these days. The shares tumbled over 7% on Wednesday and closed at $57.22. While 7% is bad enough, it actually feels worse to say that the stock lost $4.45 per share on the session. When it comes to businesses that sell popular brands to consumers, shedding $4 per share is just awful. Especially for a stock that should be a defensive name, a proverbial port in the even more proverbial storm.

Kimberly-Clark posted an adjusted profit of $1.02 per share Wednesday morning, which was a penny better than analyst expectations. The article also states that the company is suffering from a shifting exchange-rate environment and competition from private-label products. That latter point is really going to be a problem for businesses such as Procter & Gamble (NYSE: PG), Clorox (NYSE: CLX), and Colgate-Palmolive (NYSE: CL). At some point, many will probably reach for generic items as opposed to name-brand counterparts.

This doesn't mean that companies who use big brands as their main ammunition for long-term growth should be avoided. Indeed, a company that can figure out how to strike a prosperous balance between the premium it can charge for its name products and the willingness of consumers to pay it will oftentimes do well in tough markets. Kraft (NYSE: KFT) had success with this during the previous quarter. Price increases were able to power results. Kimberly-Clark is going to be severely challenged in terms of maintaining margins and keeping up a proper level of marketing spending. Everyone's going after the consumer's wallet these days, so breaking out from the pack is a requisite undertaking.

PepsiCo (NYSE: PEP), which competes with Coca-Cola (NYSE: KO) for worldwide supremacy of carbonated sugar water, is set to report earnings for the third quarter on Tuesday, October 14. What kind of growth are we looking at?

Well, according to Earnings.com, we're looking at roughly 10% appreciation for the bottom line. That is, of course, if analyst expectations are met. The call is for $1.08 per share. While 10% isn't stunning growth in some respects, it's a solid amount for a mature consumer company such as PepsiCo, and it's going to look attractive to investors searching for safe havens in the economic tempest. That's a given. However, with a beverage company, earnings aren't the only thing that matters, that I can promise you. More telling will be the case-volume metric. Wall Street always studies case-volume growth, and if that is weak, then the stock could see some pressure. I own shares of Coke, and I can tell you that I follow case volume closely. With a global slowdown going on, I'd have to imagine that PepsiCo's case-volume performance won't be the best it's ever reported. The other thing I follow with Coke is the cash-flow characteristics. Investors will want to see how free cash flow is faring with PepsiCo. A strong cash-flow statement would also be indicative of how resilient PepsiCo's stock might be over the coming months. If a lot of cash is coming in, then management will have more flexibility with share buybacks, although I'm sure managements everywhere are becoming conservative on that count, for obvious reasons.

There are some who say that video games will be just fine during the economic crisis. Of course, you have to consider who's spouting this idea when evaluating it. According to this article, gaming giants Microsoft (NASDAQ: MSFT) and Sony (NYSE: SNE) believe that the upcoming holiday season won't be so tough on their PlayStation 3 and Xbox 360 consoles. They agree with some pundits who think that people will look to drop several hundred dollars on a system as opposed to spending even more on bigger-ticket items such as a vacation. If people cocoon in their homes during this terrible time period to save cash, then they may want to play video games. That's one dimension of the argument.

The other is that consumers may turn to escapist fantasies and casual diversions to take their minds off their problems. In this sense, video games are no different than the movie industry, which is supposed to be resistant to recessions. Again, companies like Disney (NYSE: DIS) and Time Warner (NYSE: TWX) make content that can immerse you in worlds that are different (and more fun) than the one you currently exist in.

Both arguments make sense. Many video games are like movies these days, so comparing them to the film industry is important. And video games definitely are cheaper than a trip to Walt Disney World. However, there are a few things to keep in mind when thinking about these concepts and making an investment decision. First, we are arguably in an environment that we've never seen before. The variables are so different these days. Who's to say how recession-proof movies are going to be, let alone video games? An Xbox 360 can be had for $200. So what if it's less than a trip to Mickey Mouse's castle? Consumers will still be aching. At the very least, if parents don't cut back in terms of buying Johnny a system for Christmas (and they may not, since parents oftentimes refuse to disappoint their kids during the season of Santa), then surely the households who already have one system installed will think twice about installing a second system (yes, many households have multiple systems).

"'Easy hold' stocks have strong finances, consistent sales and earnings and moderate volatility; one such stock is Wal-Mart Stores (NYSE: WMT)," says Chuck Carlson in The DRIP Investor.

"Easy hold stocks are 'easy holds' for good reason -- their price action generally does not force you to make too many decisions about selling. And one that has held up quite well of late is Wal-Mart, the world's largest retailer.

"The firm's discount focus has been especially popular with consumers in recent months in light of the sluggish economy and job markets. The firm has beaten earnings estimates in each of the last four quarters. Record profits of $3.50 per share are expected for the current fiscal year ending January 2009.

"Long term, I expect Wal-Mart to provide the sort of steady sales and profit growth that will keep its stock trending higher.

"While I would not expect Wal-Mart to keep pace during the next big upward move in the market, I think the consistency of returns the stock will show over the next several years should be rewarding for investors looking for acceptable returns at moderate risk levels.

"Wal-Mart also offers a direct-purchase plan whereby any investor may buy shares directly, the first share and every share. Minimum initial investment is $250. However, Wal-Mart will waive the minimum if an investor agrees to automatic monthly investment via electronic debit of a bank account of at least $25."

Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.

General Mills (NYSE: GIS), a company that is always in a fight with Kellogg (NYSE: K), reported earnings for the fiscal first quarter on Wednesday. The stock held up very well amid all the chaotic selling that gripped Wall Street on that awful day. And why not? You know the drill. This is a defensive name, people still have to eat cereal while the bears are knocking at the door, etc.

The quarter was pretty good. Sales increased 14% to $3.5 billion. Adjusted earnings per share increased 19% to $0.96 (this excludes the effect of a mark-to-market valuation involving commodities). As if all that wasn't enough, there was a huge increase in net cash from operations. Last year at this time, General Mills generated about $21 million in operational cash flow. This year's quarter saw that metric jump over ten times to nearly $226 million. There was one problem, however. Capital expenditures and dividend obligations were higher than that number. I generally like to see operational cash easily take care of both those requirements.

Alas, it was not to be this quarter. That's okay. I think General Mills is a healthy company, and I believe it will continue to be able to pass along price increases to help fortify its bottom line. Guidance for fiscal 2009 was increased to $3.81 to $3.85 per share. The old outlook called for $3.78 to $3.83. And as for the cereal-maker's stock, it has been very, very strong. General Mills' stock was up more than 20% year-to-date. Over the last month, it's been up 3%. Heck, I'd take that, all things considered. It's not far from a 52-week high.

Personally, I think General Mills is a great way to tackle the bears that are patrolling the market, but I'd wait for a pullback. I'd rather look at the company when its dividend yield is a little higher than where it currently stands. If I bought now for a trade, I would definitely use a stop to protect the position. As I've said before, there aren't many safe bets in this environment.

Disclosure: I don't own any company mentioned; positions can change at any time.

I'll be honest. I'm not necessarily into the supermarket sector, so I've never strongly considered a company like Kroger (NYSE: KR) for my portfolio. Plus, we live in a Wal-Mart (NYSE: WMT) world, and with that retail giant trying its best to take aim at food shoppers with its own brand, I just was never into owning a Kroger. I do have to say, though, that I am wondering if Kroger might end up being a defensive stock in the current market environment. Although it has been down the last month or so, the stock has done well over longer timeframes, according to the AOL Finance snapshot taken at the time of this writing. It's been up over 5% year-to-date, and over 16% during the six-month period. And it is up over 6% today, as of 1:30 pm, on the company's Q2 numbers.

Net sales revenues increased almost 12%. The bottom line saw net income of $0.42 per diluted share. That was a solid 10% increase, and according to Earnings.com, Kroger beat estimates by one penny. Same-store sales increased a decent 4.7% excluding the effect of fuel sales. It's pretty important to exclude fuel sales, especially with the price of oil declining rapidly. With fuel, comps were up nearly 10%. Operational cash flow was flat at $2.1 billion, but it more than covered capital expenditures, dividend obligations, and share repurchases.

Kroger seems to be a healthy company at the moment. And, again, the stock seems to be working, too. Could this business be a defensive play? It sure looks like it. I wouldn't chase it today, however. I'd wait for a pullback and consider pulling the trigger after further due diligence.

Disclosure: I don't own any company mentioned; positions can change at any time.

Campbell Soup Company (NYSE: CPB) is as hot as a rich bowl of steaming broth. You just knew some sort of goofy pun like that was coming since the stock hit a new 52-week high today of $39 and change. Why is the stock reacting so well?

Campbell reported earnings on Thursday that pleased Wall Street. Net sales increased almost 13%. Adjusted earnings from continuing operations came in at $0.26 per share, a huge increase over the $0.15 per share in adjusted earnings that was booked last year at this time. According to Earnings.com, the beat on the bottom line wasn't huge, but it was still a beat -- Campbell came in one penny ahead of expectations. This was an overall impressive performance, and it looks as if the company is exploiting its brand potential in an effective manner so that price increases can be passed on. One negative is that volume decreased during the quarter, but the decline wasn't large at 1%. More significant is the fact that a 53rd week added 8% to the top line. Still, I think Campbell is doing well enough. And if oil prices continue to drop, the soup giant might find it easier to navigate the current inflationary environment.

The stock has been thriving exceptionally well during the turmoil of the financial markets. It truly has been a defensive stock, even better than The Coca-Cola Company (NYSE: KO) and PepsiCo (NYSE: PEP). I really see no reason for Campbell's stock to decline in the short term. I think it has momentum behind it. However, with the dollar gaining some strength as of late, I would worry a little about buying the stock at the 52-week high, although it does still sport a tasty dividend yield even at these levels. If you do buy now, a stop would probably be good to use.

Disclosure: I own Coca-Cola; positions can change at any time.

Boeing (NYSE: BA) lost its bid for the new Air Force tanker to Northrop Grumman (NYSE: NOC). The aircraft builder was able to get the process re-opened and now has a shot at getting the business that was awarded to Northrop.

Winning another chance at the big contract is not enough. According to The Wall Street Journal, "Boeing Co. said it is inclined to bail out of its effort to win a $40 billion contract to build aerial refueling tankers for the U.S. Air Force unless the Pentagon agrees to give it a total of six months to submit a new bid."

Boeing claims that it will take a long time to figure out how to configure one of its airplanes to haul the amount of jet fuel required by the Air Force.

The request is bogus. Boeing has been through the bidding process for the tanker once before. The idea that the company did not understand the specifications is remarkable.

Boeing may be trying to gain time to shave some of its costs off the project so that it can bring the price of its bid down. It should have done that in the first round. There is no reason it should get that additional time.

It is no wonder Northrop got the original approval, and it is likely to get it again in this round.

Douglas A. McIntyre is an editor at 247wallst.com.