House View: Our Defensive Watchlist

Our House View: five defensive names on our radar — Matador (MTDR), First Solar (FSLR), TLT, American Electric Power (AEP) and Duke Energy (DUK). Preliminary research, now under review by CHESKO 2.0. Not investment advice.

Assets we are currently studying for potential inclusion in our portfolios.

By Rafael Acevedo
CEO, Ballad Markets

Our philosophy

At Ballad Markets we believe the best investments are not always the ones that deliver the highest returns during a bull market. Very often, the best opportunities appear in companies capable of protecting capital when economic uncertainty rises.

For that reason we have begun a research process on a group of companies and assets that, under our current view, could offer an interesting combination of stability, cash-flow generation, dividends and resilience.

Important: This publication is not an investment recommendation and does not confirm open positions. It is the preliminary view (“House View”) of the Ballad Markets team, before our proprietary system CHESKO 2.0 completes its quantitative and fundamental analysis.

Our Defensive Watchlist

1. Matador Resources (NYSE: MTDR)

Our thesis

Few U.S. energy companies hold such a privileged position within the Delaware Basin, considered by many analysts to be one of the most profitable oil assets in North America.

As long as the Delaware Basin remains one of the engines of U.S. energy production, Matador could continue to generate significant free cash flow.

What we see as positives:

  • Dividend close to 3%.
  • Consistent dividend growth since 2021.
  • High-quality reserves.
  • Excellent geological positioning.
  • Solid balance sheet relative to other independent producers.

Risks

It is still an oil company. Its profitability depends mainly on the price of oil, energy policy, economic cycles and environmental regulation. We therefore do not view it as a pure defensive investment, but as a company with relative defensive characteristics within the energy sector.

Ballad Markets status: Under review by CHESKO 2.0.

2. First Solar (NASDAQ: FSLR)

Our thesis

There is an enormous difference between investing in solar energy and investing in conventional panel manufacturers. First Solar holds a very important technological edge: it does not depend on polysilicon like most of its competitors. Its Cadmium Telluride (CdTe) technology sets it apart from Asian manufacturers.

If the global electrification process keeps accelerating, we believe First Solar could remain one of the main beneficiaries.

What we like most

  • Technological leadership.
  • Extremely solid balance sheet.
  • Low debt.
  • Strong cash-generation capacity.
  • Powerful structural sector growth.

Risks

It pays no dividend. There is also a relevant risk related to the global supply of tellurium, a critical mineral for its production. We therefore see it more as a growth investment than a classic defensive one.

Ballad Markets status: Under analysis.

3. iShares 20+ Year Treasury Bond ETF (NASDAQ: TLT)

Our thesis

If markets go through an economic slowdown and central banks begin a rate-cutting cycle, long-dated U.S. Treasuries could once again become one of the market’s primary defensive assets.

TLT currently offers:

  • A yield close to 5%.
  • Direct exposure to U.S. sovereign debt.
  • Low correlation to many equities.

In a diversified portfolio it can act as a shock absorber during periods of high volatility.

Risks

Its main enemy remains an unexpected rise in interest rates.

Ballad Markets status: High priority for evaluation.

4. American Electric Power (NASDAQ: AEP)

Our thesis

Utilities remain one of the most stable sectors in the U.S. market. American Electric Power combines regulated revenue, decades of growing dividends, structural demand for electricity and an essential business.

We particularly like its ability to generate relatively stable cash flow even during economic slowdowns.

Risks

  • Regulation.
  • High CAPEX.
  • Energy transition.

Ballad Markets status: Defensive candidate.

5. Duke Energy (NYSE: DUK)

Our thesis

Duke Energy is exactly the type of business that tends to behave better during periods of economic uncertainty. Its combination of dividends, regulated assets, stable demand and a long operating track record makes it very interesting for conservative strategies.

Risks

  • High leverage.
  • Regulation.
  • Grid modernization investments.

Ballad Markets status: Under review.

Our global view

We currently see an environment where capital preservation is regaining importance. Our attention is therefore focused on companies capable of offering some combination of sustainable dividends, real assets, competitive advantages, consistent cash-flow generation and resilience across economic cycles.

We are not chasing the highest growth alone. We are looking for businesses that can keep working regardless of market noise.

The next step: CHESKO 2.0

Before adding any of these assets to our strategies, CHESKO 2.0 will run a full evaluation covering:

  • Fundamental valuation.
  • Balance-sheet strength.
  • Cash-flow quality.
  • Dividend sustainability.
  • Quantitative analysis.
  • Macroeconomic risk.
  • Technical analysis.
  • AI-driven market sentiment.
  • Probabilistic scenarios.
  • Dynamic risk management.

Only the companies that clear our internal criteria will move into our tracking portfolios.

Conclusion

Our House View identifies five assets that deserve special attention for their potential to add stability, recurring income or resilience across different market scenarios.

That said, this list represents only the beginning of the research process. The final decision will depend on the thorough analysis carried out by CHESKO 2.0 and on how macroeconomic conditions evolve.

Disclosure: This document reflects the personal opinion of Rafael Acevedo and the view of Ballad Markets as of the date of publication. It does not constitute financial advice or a recommendation to buy or sell securities. All investing involves risk, including the possible loss of capital.

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