Johnson & Johnson (JNJ)

The kind of stock you can put in the “buy, hold and forget about it” category. They have some well recognized brands. He doesn’t know what the Trump effect would be on this type of company. The company has a tremendous history of increasing shareholder wealth through increasing earnings per share, and increasing shareholder equity through their very attractive ROE.

A very well-run company. It has a huge number of products. It has a decent dividend and a good quality balance sheet. It has really been a growth by acquisition. Regarding the consumer products part of it, as Amazon (AMZN-Q) increasingly attracts shoppers, does this company capture part of that margin that is being taken away from retail and grocery stores? Can they allocate their advertising budget more efficiently and effectively? If these companies do start capturing part of that margin, ensuring that part of their profit with Amazon, then he thinks they are interesting. In the interim, he doesn’t think these are all that interesting.

A wonderful company. His only reservation is, if looking for healthcare, this company has a lot of over-the-counter of hairsprays, Band-Aids, etc. They have a wonderful dividend.

A great unique company and business model. Pharma and personal care consumer businesses. If you built a position at these levels you probably won’t regret it. It will be akin to US GDP growth. It will not be in the cross hairs of any pharma policy changes.

(A Top Pick Dec 31/15. Up 15.82%.) Sold his holdings as he felt it had run up a lot, and he had found other opportunities. You can’t go wrong owning this, but he just wanted to put money someplace else.

One of the names you want to hold in the pharmaceutical healthcare area for the long term. The pharmaceutical healthcare field has had good earnings growth, and are expecting significant earnings growth next year, especially on the pharmacy side. These kinds of names were really hurt in 2016, because there was fear that if Clinton came in, they are going to start regulating prices along with additional regulations on the pharmaceutical industry. This trades at a premium to the group at about 20-21 times earnings. They have a great platform with a pipeline of about 10 medications that should be coming on market in the next 5 years. They are great at cost cutting. Also there is a potential acquisition they are looking at.

This is more broadly diversified than others in the pharmaceutical area. Pharmaceuticals is about 45% of their revenues. They have medical devices and diagnostics as well as their consumer products division. On the Pharma side, they have a very strong pipeline, and have identified 10 drugs that potentially have $1 billion revenue potential, that will be launching over the next 3 years. Attractively priced at about 16X forward earnings, below their market multiple. Dividend yield of 2.7%. Have consistently raised the dividend for 55 years.

With the pickup in financials, (which were really under owned by institutions, portfolio managers and investors), they looked at their holdings to see what they could sell, because there wasn’t a lot of new money coming into the market. A lot of the leading technology stocks and healthcare stocks sold off. In the last 2 weeks, we are starting to see net flows into equities, which could be the beginning of that great rotation that people talk about. Right now, healthcare is not one of the leading groups. There has been some tax loss selling, but feels we are getting towards the end of that. Some of these lagging groups are starting to bubble up. This is a great quality company.

There has recently been a massive rotation out of defensive areas, where you didn’t need to rely on GDP growth. This is a wonderful company. Trades between $100 and $120, and is probably going to trade in this range for a time. Large institutional companies will probably look at this as a source of cash, and looking elsewhere to deploy their capital. Dividend yield of 2.9%.

This is expensive. It is at a very high valuation level on a Price to Book basis. His FMV was about $125 with a technical ceiling at about $130. Thinks the stock has pretty much had it, and he wouldn’t be invested in it.

A bond-like proxy for a stock portfolio. One of 3 publicly traded companies that still has an AAA rating credit. They have tremendous amounts of financing capabilities. They pay a nice dividend, and have grown it at a very high rate over the last decade. If they ever wanted to split the company up, they could unlock value in terms of their consumer business, their R&D, and their pharmacy business. This should be a core portion for any portfolio. Doesn’t think this is overly expensive.

(A Top Pick Nov 9/15. Up 15.52%.) He sold this in order to buy another stock. This is a great company, but has run up a lot in the last little while. Thinks it will move sideways for the next while. Dividend yield of 2.8%.

One of the world’s great businesses with their great consumer products business, medical devices and pharma. Shares have risen, so it is no longer a value stock, so he is not going to buy it here. This is a dividend raiser. They ran into a bit of an issue recently. They make Remicade for Crohn’s disease, and there is now a competitor coming out with a bio-similar Remicade. Not cheap enough for him.

There are 3 parts to their business; pharma, medical devices and consumer products. Medical devices are about 40%, and consumer products are about 20%. Unfortunately, that 60% has had fairly flat growth. The Pharma sector has really been the rock star. Each business would be large enough to stand alone, and you would be better off if the business was split into 3. Decent dividend of about 2.7%.

A well-run dominant business in many of its key brands from a consumer product standpoint as well as a big healthcare business. Not overly cheap. Has owned this in the past.