By Doug Busch

As 2025 heads toward a close, one sector is starting to attract defensive-minded investors: consumer staples. Known for its mature, dividend-paying companies, the group could become even more appealing if interest rates were to ease.

Through the Consumer Staples Select Sector SPDR Fund, the sector is flat year-to-date, the weakest of the 11 major S&P 500 groups. On a six-month basis, it again ranks last as the only sector in negative territory. Yet in the shorter term, the ETF has shown resilience, posting the second-strongest gains over the past week and the third-best over the past month. This week, the fund will attempt its first four-week winning streak since a seven-week run began in January. Colgate would help as it looks like it can turn around. The ETF's second-largest holding, Costco, remains under pressure. The stock traded near April lows last week, and will need to firm up for the group to have a chance.

M&A activity is also stirring interest, indicating some of the stocks could be undervalued. Kimberly-Clark's acquisition of Kenvue sent the former gapping down to a key round-number level, while TreeHouse Foods is being taken out at nearly a 25% premium. Let us now look at three other names in the sector that are showing attractive technical setups.

Walmart has been a standout in thespace, trading just 4% below its 52-week high, while the benchmark ETF sits 8% off its own annual peak. Walmart is also showing resilience against Amazon, which trades 15% below its all-time high following a bearish evening star on its weekly chart.

Round-number theory is at play, with the $100 level providing strong price memory. This area served as formidable resistance from February through July but has since acted as a floor. It also coincides with the pivot of a bearish head-and-shoulders pattern, which Walmart broke to the upside on Nov. 20 following its first positive earnings reaction of 2025, surging 6.5%. Despite a 10% pullback after a bearish engulfing candle on Oct. 16, the risk/reward profile looks attractive. A long entry here targets a move toward $120 in early 2026, with the bullish thesis remaining intact above $98.

Walmart was trading around $105 Monday.

Target, a struggling retailer, is down 35% year to date, pushing its dividend yield above 5%. From a longer-term perspective, the stock is now 67% below its all-time high of Nov. 16, 2021. It has closed lower 12 of the last 15 weeks and has lagged peers. Notably it has trailed Kohl's, which gained 13% over the past three months while Target slumped 12%.

Technically, the monthly chart suggests a potential entry point. This is only the third time in nearly 20 years the stock has touched its rising 200-month simple moving average, with prior rebounds in 2007, 2008 and 2017. The stock is also testing a bullish inverse head-and-shoulders breakout from August 2019. If buyers step in, a double bottom pattern is forming, started on the left side by a bullish morning star just above the $100 round number. A move toward $105 is possible by the end of the first quarter. Remain bullish above $82.

Target was trading around $86 Monday.

Coca-Cola, a classic defensive play, sits just 3% below its 52-week high. The stock is up 16% in 2025 and offers a dividend yield near 3%. It has risen in seven of the past eight weeks, far outshining rival PepsiCo, which has fallen in 10 of the last 14.

Technically, Coca-Cola cleared a bullish inverse head-and-shoulders pivot at $71 last Friday, an area that can also be read as a bull-flag breakout. The recent late September lows successfully retested the Feb. 11 cup-base breakout, which was a 5% earnings driven gap higher. A move toward $85 is plausible in the second quarter 2026, and the chart remains constructive above $68.

Coca-Cola was trading around $72 Monday.

Doug Busch is the senior technical analyst at Barron's Investor Circle . His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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November 24, 2025 11:47 ET (16:47 GMT)

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