In an earnings season that has seen a lot of positive results – as well as a few equally disquieting surprises – it may be a good time to load up on a solid, defensive stock like The Procter & Gamble Co. (NYSE: ).

In the period between last October and March 29, when the market was gripped by panic-selling and widespread liquidation, we were actively buying the cyclical stocks in energy, other natural resources, and high-technology – essentially the stocks that everybody is very excited about now. 

By doing so we took advantage of low valuations. And as governments around the globe deployed stimulus measures, we enjoyed nice gains on the iShares MSCI Brazil exchange-traded fund (NYSE: EWZ), Diamond Offshore Drilling Inc. (NYSE: ), Vale SA (NYSE ADR: ) and Petroleo Brasileiro SA (NYSE ADR: ). 

But since May, I’ve recommended taking profits (for trading-oriented accounts) in most of those pro-cyclical global plays and moving into more “defensive” situations.  I purposely highlight the word defensive, because I believe that on certain occasions these plays actually can become our best offense.

These companies are resistant to recessions because the staples that they sell are necessities that we cannot do without, like toothpaste and soap.  Because of this low sensitivity to general economic activity and low seasonality in general, their cash flows are extremely stable.  This gives them the added advantage of having low, dependable funding, which is a huge advantage when bank and market financing is scarce or comes only at a premium.

There has been nothing said about these companies being up against the ropes with creditors.  In fact, it’s quite the opposite. These companies, in general, generate such strong and even cash aflows that they are able to pay very generous dividends.

So, let’s move into the current earnings season.  While we got out of the way to avoid the negative surprises [like we just saw with Microsoft Corp.