Would deflation be bad for stocks? Many investors appear to think so, judging from the market’s recent hiccups after signs that deflation could be rearing its head. But MarketWatch’s Mark Hulbert says that might not be the case — particularly for certain types of stocks.

In his most recent column, Hulbert says Ned Davis Research’s Senior Sector Strategist, Lance Stonecypher, offers some interesting data on how deflation has historically affected different types of stocks. “Perhaps the primary conclusion that Stonecypher reached was that, during past deflationary periods, the industry groups that performed the best fell into two categories: Necessity and Defensive,” Hulbert says. “Examples include Consumer Staples and Health Care.”

Hulbert says Stonecypher focused on deflationary periods in the U.S. and Japan, and adds that “there haven’t been many such periods, [so] his conclusions of necessity must remain somewhat tentative.”

But Hulbert says some “fairly consistent themes nevertheless did emerge.” In addition to the outperformance of certain sectors, another theme, he says, was that large-caps tend to significantly outperform small-caps in deflationary periods. Stonecypher also suspects that firms with the lowest debt/equity ratios outperform in such periods, but he was unable to confirm the theory because he doesn’t have sufficient debt/equity historical data, Hulbert says.

Hulbert’s bottom line: “It is possible to be gravely concerned about the prospects of outright deflation and still invest in equities.”