Defensive Stock

A defensive stock belongs to a company whose products or services see relatively stable demand regardless of the economic cycle, common in sectors like utilities, consumer staples, and healthcare. People keep buying groceries, electricity, and medicine in a recession even as they cut back on cars and vacations.

Defensive stocks tend to fall less than the broad market in downturns but also lag in strong bull markets, since investors typically pay a premium for their stability in exchange for accepting less upside participation when the economy is booming.