As I noted earlier this week, the current market environment could prove to be a real opportunity for investors — if the economy sputters to life. And even as there’s ample reason to expect the economy and the stock market to eventually strengthen, recent economic data raises concerns that things may get a bit worse before they get better. In fact, U.S. Treasury Secretary Tim Geithner recently warned that the unemployment rate may tick up in the near-term.

So even as investors position their portfolios with potential gainers, stocking it with defensive plays that are unlikely to fall much in the event of further economic weakness isn’t a bad idea either. To be sure, income-oriented plays like utilities are often seen as a hedge against market weakness, thanks to their stable and secure payouts. But know that if inflation rises and government bonds offer higher yields, these income-producing equities could suffer from comparatively weaker payouts.

With that in mind, here’s a look at three stocks that should hold their own in tough times, thanks to their prodigious and steady cash flow. Each of these companies might actually benefit from any downturn as they could deploy their considerable cash balances to buy back an ever-increasing number of shares as stock prices fall.

Bristol-Myers Squibb (NYSE: BMY)
Shares of this large drug maker didn’t fall very much when stocks were tanking in early 2009 thanks to a strong balance sheet, boringly predictable revenue streams and a juicy dividend yield. These days, the company remains a bit boring — sales grew +2% in the most recent quarter — and investors are so indifferent that shares offer a hefty 5% dividend yield. Yet Bristol-Myers Squibb’s financial firepower is so strong that the company is also conducting a $3 billion share buyback while maintaining that dividend.

Looking ahead, the company may even start to look like a growth stock again. It is pursuing several new blockbuster drugs including cancer drug ipilimumab, the diabetes drug dapagliflozin, and the anti-clotting drug apixaban, which is being co-developed with Pfizer (NYSE: PFE). But right now, focus on the protection afforded by the company’s steady operating cash flow, which now tops $5 billion a year.

As noted earlier, any share price weakness would allow management to get even more out of that massive share buyback program while pushing the dividend yield ever-higher.

ConAgra Foods (NYSE: CAG)
We all need to eat. And in tough economic times, we’re more likely to eat at home rather than dine out. That sets up this maker of prepared foods to be a solid defensive play. The company owns such brands as Hunts, Orville Redenbacher, Chef Boyardee, Hebrew National and Peter Pan. In recent years, ConAgra has beefed up its exposure to the frozen food aisle with brands like Marie Callender, Healthy Choice and Banquet.

In recent years, management has learned to operate this business more efficiently, steadily boosting EBITDA margins from 10.6% in fiscal 2008 to 13.1% in fiscal 2010. Management believes the EBITDA margin can hit 15% in the next few years, while analysts expect profits to rise around +10% in each of the next two years.

As profits rise, ConAgra is adding more than $500 million to its balance sheet every year. As debt is paid down, more money is left for share buybacks and acquisitions. The company is already in the midst of a $500 million share buyback, which could reduce the share count by about -4%. If no compelling acquisition opportunities emerge during the next year, that share buyback is likely to be extended. The company could also seek to boost its dividend, which currently yields about 3.4%.

Shares trade for around 11 times next year’s projected profits. With that below-market P/E, shares would be cushioned against the pressures of a weakening stock market.

Nokia (NYSE: NOK)
It may seem odd to include this stock among a group of defensive investments. But shares have fallen so far, and the company’s balance sheet is so strong, that any further share price weakness looks unlikely.

Management is tasked with turning around its cell phone business after market share losses to the likes of Apple (Nasdaq: AAPL). That may take several years. In recent quarters, Nokia’s management has poured more resources into R&D, vowing to once again become relevant in the smart phone market.

In the mean time, Nokia has $11 billion in cash — $6 billion when debt is subtracted — which can help to sop up a lot of shares while they are out of favor. The company has a history of doing this: A decade ago when shares were out of favor after the dot-com implosion, Nokia started buying back its stock, ultimately reducing the share count from 4.8 billion to a recent 3.7 billion. The company could buy back another 650 million shares right now at current prices for about $5.6 billion, which would boost earnings per share (EPS) by nearly +18%.

Action to Take –> These stocks can help investors sleep a little easier at night, as they are not likely to fall as quickly as most growth-oriented names. Management at each company is taking steps to boost sales and profits and has the benefit of a bullet-proof balance sheet to work with. Investors may want to add these defensive names to their portfolio while the economy is still wobbling on its axis. Once the economy is on the mend, sell off positions like these and focus more squarely on stocks poised for higher growth.