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As Recession Odds Climb, Defensive Sectors Continue to Outperform

Written by Jessica Mitacek

This year’s exodus from tech stocksand other growth-focused corners of the market has been well-documented. But after the NASDAQ and Dow Jones Industrial Average both entered a correction last week, it is increasingly evident that Main Street is feeling the pinch just as much as Wall Street. 

Consumer discretionary, for example, is 2026’s second-worst performer of the S&P 500’s 11 sectors through the first quarter of the year, which underscores how Americans are dealing with sticky inflation and subsequently tighter budgets. 

Outside of the stock market, the Conference Board’s Expectations Index has fallen below the 80-point threshold, a level historically associated with an impending recession. The drag has been exacerbated by the war in Iran and expectations of higher inflation. 

But while consumers are tightening their purse strings, it presents an opportunity for defensive-minded investors, specifically consumer staples.

The fourth-best performer in the S&P 500 this year, consumer staples will continue to act as a hedge against additional downward price action in growth and cyclical sectors as Americans continue to prioritize needs over wants. 

For broad exposure, the Vanguard Consumer Staples ETF (NYSEARCA: VDC) offers a basket of stocks that showcases the largest companies operating in that sector, alongside a dividend that pays shareholders to wait out any potential economic downturn.  

As Consumer Confidence Wanes, Consumer Staples Benefit

From the American Association of Individual Investors’ sentiment surveyand CNN’s Fear & Greed Index to the University of Michigan’s Surveys of Consumers, bearishness, fear, and insecurity are dominating investor and consumer mindsets. 

According to Surveys of Consumers Director Joanne Hsu, over the past month, “declines were seen across age and political party. Consumers with middle and higher incomes and stock wealth, buffeted by both escalating gas prices and volatile financial markets in the wake of the Iran conflict, exhibited particularly large drops in sentiment.” 

Hsu added that the near-term economic outlook fell by 14%, and expectations for personal finances over the next year dropped by 10%.

That waning consumer confidence is good news for stocks operating in the consumer staples sector—a corner of the market that has been overlooked in recent years as growth stocksmaintained the narrative. 

But after finishing 2025 second-to-last among all sectors with an uninspiring 3.9% gain, consumer staples is back in the spotlight as it is outperforming the broad S&P 500 for the first time since 2022 during the last bear market. 

Inside VDC: A Staples Basket Built Around Inelastic Demand

The VDC caters to investors who are aiming to insulate their portfolios with companies offering goods that are inelastic in demand. The fund seeks to track the investment performance of the MSCI US Investable Market Consumer Staples 25/50 Index, a benchmark of large-, mid-, and small-cap U.S. consumer staples stocks. 

Like the index it tracks, the VDC is composed of companies whose businesses are less sensitive to economic cycles and includes manufacturers and distributors of food, beverages, tobacco, nondurable household goods, and personal products. It also includes food and drug retailing companies as well as hypermarkets and consumer supercenters. 

The result is a basket of stocks that, among its roughly 109 holdings, range from its largest constituent having a market cap of nearly $985 billion to its smallest constituent having a market cap of under $105 billion. 

Showcasing its diverse portfolio of companies that provide essential consumer goods, Walmart (NYSE: WMT), Costco (NASDAQ: COST), Procter & Gamble (NYSE: PG), Coca-Cola (NYSE: KO), and PepsiCo (NASDAQ: PEP) make up the top-five holdings with a collective weighting of more than 49%.  

The ETF is also a reliable source of income, highlighted by four of the fund’s top-five holdings being members of the exclusive Dividend Kings club (Costco being the sole exception, though after 22 consecutive years of increases, the warehouse club is nearing membership in the Dividend Aristocrats club).

The VDC currently yields 2.15%, or $4.82 per share annually, paid in quarterly distributions.  

Year-to-Date Performance Hints at Exactly What Investors Should Expect

So far in 2026, the VDC has posted a nearly 6% gain.

While that may not catch the eye of growth investors who have enjoyed the triple-digit gains posted by some of the top semiconductor and AI stocks over the past few years, that gain demonstrates exactly why conservative-minded investors turn to the fund: low volatility, steady gains, and market outperformance during downturns. 

For context, the S&P 500 has lost nearly 8% this year.

Meanwhile, the VDC’s beta of 0.56 demonstrates that the fund is nearly half as volatile as the overall market—something that should be alluring to investors looking to safeguard their portfolios during a time of uncertainty, global conflict, and regulatory pressure. READ THIS STORY ONLINE

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This New Spinoff Is a Nuclear and AI Chip Beneficiary Worth Watching

Written by Leo Miller

Solstice Advanced Materials (NASDAQ: SOLS) is a relatively new stock to the market, but one that has gotten off to a blistering start. At the end of October 2025, the over $100 billion industrial conglomerate Honeywell International (NASDAQ: HON) spun out the company.

Since that time, Solstice shares have gone on an impressive run, up more than 50%. This comes as the firm is benefiting from key tailwinds across both the nuclear energy and semiconductor industries.

Investors should likely temper their excitement given Solstice’s current share price, which bakes in years of extensive growth. However, with the firm at the intersection of two top investment trends, Solstice is a name to watch should its valuation retreat significantly.

U.S. Uranium Conversion Runs Through Solstice

Largely due to the rapid deployment of artificial intelligence (AI) data centers, nuclear energy and advanced semiconductor demand are on a big upswing. Many hyperscalers want to accelerate nuclear adoption due to rising electricity demand. This can help fulfill two key goals.

First off, nuclear energy is low-carbon, allowing these firms to make good on their clean energy commitments. Additionally, unlike other renewable sources like wind and solar, nuclear sites can run constantly, supporting demanding and continuous AI workloads.

Notably, Solstice owns the Metropolis Works uranium hexafluoride (UF6) conversion facility. This makes the firm the only domestic provider of UF6 conversion services. Solstice converts raw uranium into UF6 before it moves on to other producers in the fuel fabrication cycle.

Clearly, this gives Solstice a level of importance in national energy security. This is particularly true as the company notes that there are only four other UF6 conversion sites in the world. According to 2022 data, one of these is in Russia and another is in China, both countries that have adversarial relations with the United States.

Due to the rise in nuclear demand, capacity at the Metropolis facility is nearly sold out through 2030 and holds an over $2 billion backlog. Bank of America estimates that global nuclear energy capacity could triple by 2050, creating a significant opportunity for Solstice in a fragmented market.

A key threat is the entrance of new competitors. However, Solstice notes that getting new facilities production-ready takes four to five years.

SOLS’s Copper Manganese: A Vital Input for AI Semiconductors

Meanwhile, advanced semiconductors are fundamental to the proliferation of AI. Solstice holds a similarly strong position as an advanced chip material supplier.

This comes as the firm makes copper manganese sputtering targets: essential for building semiconductors at process nodes below seven nanometers (nm). The company says it is “really the only producer that has copper manganese at scale.” It also notes that it is one of only two or three suppliers in the world.

Solstice sees the demand for copper manganese continuing to increase as AI progresses. Moving to smaller and smaller process nodes is among the most important vectors for increasing semiconductor performance. As process nodes fall, they require more copper manganese.

The increased commitment to U.S.-based advanced semiconductor manufacturing also benefits Solstice, making these customers more likely to buy from it due to proximity. Top players in the semiconductor industry are investing heavily:

• Taiwan Semiconductor Manufacturing (NYSE: TSM) is producing its 4nm chips in Arizona and plans to bring its 3nm process online by 2027.
• Samsung Electronics (OTCMKTS: SSNLF) plans to produce 2nm chips at its facility in Taylor, Texas.
• Intel (NASDAQ: INTC) plans to invest $100 billion to expand its chipmaking capacity in the U.S., with its Fab 52 designed to make 1.8nm chips.

To support rising demand, Solstice is investing $200 million to double its sputtering target manufacturing capacity at its facility in Washington State. Overall, copper manganese demand is another significant opportunity that the firm is taking advantage of, and SOLS sees substantial runway for future growth in this space.

SOLS: A Watchlist Stock Amid Demand From High-Growth Industries

In its latest quarter, Solstice’s nuclear business grew by an impressive clip of 39% year over year (YOY). Meanwhile, its Electronic Materials division, which houses sputtering targets revenue, grew by a solid 19% YOY. Despite this, it is important to note that Solstice is a highly diversified business, not a pure play on nuclear and semiconductor trends. In 2024, nuclear and semiconductors combined for just  22% of total revenue.

Thus, total sales grew by just 3% YOY in 2025 and 8% YOY in Q4 2025. In 2026, the company’s revenue growth projection sits near 4%. This doesn’t line up favorably compared to Solstice’s valuation, making the stock’s outlook questionable at current levels.

Overall, Solstice is clearly an interesting company, acting as a key supplier within the nuclear and semiconductor investment cycles.

This makes the stock one to watch going forward, should its aggregate fundamentals or valuation shift meaningfully. READ THIS STORY ONLINE

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USA Rare Earth: As Losses Rise, Operational Progress Matters More

Written by Leo Miller

USA Rare Earth (NASDAQ: USAR) is a small company working to solve a big problem: the United States’ reliance on China for rare earth elements (REEs). Currently, mining company MP Materials (NYSE: MP) is the only U.S. firm producing and processing REEs at scale. It is also the only U.S. company making permanent magnets, the vital products made using REEs.

Excitement around REE companies has helped USA Rare Earth’s shares rise approximately 150% over the past 52-weeks. Still, the basic materials stockis among the most volatile in the market, now down well more than 50% from highs.

The company recently reported earnings. Its adjusted loss per share increased from 15 cents to 19 cents, leading the firm to miss estimates significantly. However, for this early-stage company, revenue and earnings do not tell the full story.

At this point, USAR’s primary goal is to become a fully integrated mine-to-magnet producer in the United States. By examining the progress the firm has made on this front, investors can get a sense of what to expect going forward.

Why Building up REE Magnets Is a Strategic Priority for the U.S. Government

The United States government has recognized that REEs, and ultimately permanent magnets, are critical to economic and national security. This comes as technologies from consumer electronics, electric vehicles, clean energy infrastructure, and defense systems rely on permanent magnets.

However, China dominates this industry and isn’t afraid to use its influence to control prices and as a geopolitical tool. Overall, China controls around 60% of worldwide REE mines, 90% of processing, and 94% of permanent magnet production.

This is why the US Department of Defense invested $400 million in MP Materials. It also guaranteed MP a $110/kg price floor on Neodymium-Praseodymium (NdPr) oxide. Producers refine REEs to create NdPr oxide, which they can then use to make magnets. In September of 2025, this price floor was 86% higher than the market price MP received, showing the government’s extensive support for its operations. With this background, let’s dive into how USAR’s strategy is progressing thus far.

USAR’s Site Development and Funding Gain Steam

USAR noted several developments in its earnings report that show the firm is moving toward its goal. The company’s Round Top deposit in Texas is its most valuable asset, containing a significant amount of REEs. Notably, the firm is now targeting the commissioning and commercial production at Round Top in late 2028, two years ahead of its previous schedule.

The firm acquired Less Common Metals (LCM) in November 2025, which will support important manufacturing steps for eventual magnet production. The acquisition also allowed USAR to generate revenue after seeing no sales in 2024, as LCM had existing customer relationships.

However, sales were still small at $1.64 million. Because the acquisition took place in late November 2025, these sales likely accounted for only a month of revenue. Thus, sales in 2026 should be much larger. Still, LCM’s role in supporting USAR’s long-term mine-to-magnet ambitions is more important than the revenue it brings in near-term.

USAR has also commissioned its Stillwater magnet production site in Oklahoma. USAR believes this will enable it to begin fulfilling customer orders for permanent magnets in Q2 2026.

Funding is another area of strength. The company generated gross proceeds of $1.5 billion from a private stock offering. It also expects to sign an agreement with the Department of Commerce in April to gain access to an additional $1.6 billion in funding. However, it is important to note that most of the Department of Commerce funding would come through a loan.

Combined with its $360 million in cash and equivalents and proposed support from the French government, this could give the firm total funding of nearly $3.5 billion. In this case, USAR would be within earshot of the estimated $4.1 billion needed to build out its mine-to-magnet platform.

USAR: High Upside Potential With Substantial Risks

USAR is targeting $2.6 billion in revenue in 2030 and $900 million in free cash flow. With a market capitalization currently near $3.3 billion, if the company is successful in its plan, its valuation today looks cheap. However, its plan does face significant risks.

The Department of Commerce funding is not guaranteed. If the deal falls through, it would leave a huge gap in USAR’s funding needs. It is also possible that the actual funding the company needs to finance its projects exceeds current estimates. Additionally, construction or mining setbacks could cause significant delays in large-scale revenue generation.

Still, the importance of diversifying the REE supply chain remains an ace up USAR’s sleeve. Additionally, its Round Top Deposit is particularly rich in heavy REEs. Highly advanced technologies require heavy REEs, and their prices are much greater than the light REEs MP specializes in.

Overall, USAR is a high-risk, high-reward stock, and one that investors should have significant conviction in before considering. READ THIS STORY ONLINE

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Further Reading: Ticker Revealed: Pre-IPO Access to “Next Elon Musk” Company(From Banyan Hill Publishing)