Worried About the Stock Market in 2026? These 3 Stocks Did Well During the Last Bear Market.

The piece highlights three blue‑chip defensive names—AbbVie, Eli Lilly and Chevron—that outperformed during the 2022 bear market (AbbVie +19%, Eli Lilly +32%, Chevron +53%) and are presented as portfolio hedges if market volatility returns in 2026. Key fundamentals: AbbVie trades near 16x forward earnings, yields ~3.1% and has shifted revenue mix from Humira toward Skyrizi and Rinvoq across immunology, oncology and neuroscience; Eli Lilly’s GLP‑1 drugs (Mounjaro, Zepbound) helped revenue accelerate to >$59 billion over the past four quarters (from <$29 billion in 2022) with a 0.6% yield; Chevron has delivered >=$15 billion profit in each of the past four years and yields ~4.6%, with oil prices and geopolitical shocks cited as drivers of sector returns.

Analysis

Market structure: The near-term beneficiaries are large-cap defensive healthcare (ABBV, LLY) and integrated energy (CVX) firms with durable cash flows and dividends; high‑multiple tech/consumer cyclicals are the likely losers if a 2026 downturn compresses multiples by 15–30%. Competitive dynamics favor incumbents: LLY’s GLP‑1 pricing power gives it >30% year‑on‑year revenue runway absent policy change, AbbVie’s 16x forward earnings and 3.1% yield provide relative valuation support, and Chevron’s 4.6% yield makes it a capital‑return hedge when commodity volatility spikes. Cross‑asset: higher oil or inflation surprises would push 10y yields +25–75bp, steepen curves and raise equity vol in cyclicals; expect hedging flows into puts (biotech/energy) and safe‑haven FX (USD, JPY).

Risk assessment: Tail risks include GLP‑1 reimbursement or prescribing restrictions (could cut LLY growth by 30–50% over 12–24 months), accelerated Humira biosimilar share loss for ABBV, and a demand shock for oil that could shave CVX EBITDA >20% in a deep recession. Time horizons: watch immediate (30–90 days) catalysts—FDA decisions, quarterly reports, CPI/FOMC—while strategic impacts play out over 6–24 months. Hidden dependencies: LLY concentration in GLP‑1 class and AbbVie’s M&A pipeline; both amplify binary outcomes. Catalysts to watch: CME Fed dates, major FDA rulings, OPEC+ moves and Russia/Ukraine developments.

Trade implications: Direct plays—establish modest core longs in ABBV and CVX as ballast and a tactical, hedged growth exposure to LLY. Use pair trades to neutralize market beta (e.g., long ABBV vs short QQQ) and deploy option overlays: LEAP calls on LLY funded by selling near‑dated calls, covered calls on CVX to enhance yield, and protective puts on ABBV. Entry: tranche over next 2–6 weeks; trim on rallies of +12–18% or on volatility spikes; target holding 6–24 months depending on catalysts.

Contrarian angles: The consensus defensive trade may underprice AbbVie’s asymmetric upside at 16x and steady 3% yield—this is a potential mispricing vs overenthusiastic credit toward GLP‑1 winners where policy risk is underappreciated. Energy’s 2022 parallel (windfall from supply shock) is a poor analogue for a demand‑driven 2026 recession; CVX upside is limited absent geopolitical supply shocks. Unintended consequence: crowded defensive positioning could increase correlation and amplify drawdowns if macro risk‑off forces simultaneous selling across these 'safe' names.

Key Decisions for Investors

• Establish a 2.5% portfolio long position in AbbVie (ABBV) within 2 weeks; hedge tail risk by buying 6‑month 8% OTM puts equal to 25% of the position cost; trim half of the position at +15% and stop‑loss at -12%.
• Allocate 1.5% to a hedged Eli Lilly (LLY) growth trade: buy 12‑18 month LEAP calls ~15% OTM funded by selling 3‑month calls 20% OTM (roll monthly); if GLP‑1 regulatory news within 90 days is negative, sell LEAPs and switch to cash/short dated puts as loss mitigation.
• Add 2–3% long Chevron (CVX) as an inflation/commodity hedge and implement a buy‑write: purchase shares and sell 6–9 month calls 10% OTM to generate income; reduce exposure if Brent crude falls below $70/barrel for >30 days or on recession GDP hit >1.5% q/q annualized.
• Execute a relative value pair: long 2% ABBV vs short 1% QQQ over next 4–12 weeks to reduce market beta; increase short leg if NASDAQ breadth narrows by >60% or if implied vol of QQQ rises >30% from current levels.