A Rallying Blue Chip and Locking in Three 15% Gainers

This week’s Alpha Algorithm recommendation, Johnson & Johnson (JNJ), revisits a previous pick with big momentum. As of this morning, JNJ is the single most popular position among the Alpha Algorithm strategies.

Founded in 1885 and based in New Brunswick, New Jersey, Johnson & Johnson manufactures and sells various products in the health care field worldwide.

Its consumer product portfolio includes household names like Listerine, Tylenol and Sudafed. The company also manufactures and sells pharmaceutical and medical devices.

Johnson & Johnson (JNJ) versus the S&P 500 over one month.

12 Top Investment Strategies Betting on Johnson & Johnson (JNJ)

1. High Quality Stock

The stock exhibits positive fundamentals, including high return on equity, stable year-over-year earnings growth and low financial leverage.

2. Fundamental Strength

It is a top U.S. stock based on fundamentals that are measured by book value, cash flow, sales and dividends.

3. Dividend Aristocrat

The stock is among those that have increased dividends for at least 25 consecutive years.

4. Hedge Fund Alpha

Based on publicly available disclosures, successful hedge fund managers are investing in the stock.

5. Dividend Dog

It is one of the five highest-yielding stocks among each of the 10 sectors tracked in the S&P 500.

6. Goldman Sachs’ Active Beta

The stock is selected according to four factors — value, quality, momentum and low volatility. These, in turn, are based on criteria including book value, sales and cash flow scaled by share price, profit/assets or return on equity (ROE), risk-adjusted returns and daily standard deviation of returns.

7. Value Tilt

Selected using a multi-factor modeling approach, this is a value stock designed to enhance portfolio risk/return characteristics.

8. Momentum Factor

The stock also is one of the top 120 large- and mid-cap U.S. stocks exhibiting relatively higher price momentum, as measured by a specific factor which has historically driven a significant part of companies’ risk and return.

9. Capital Strength

The stock is part of a strategy that seeks to outperform the market by selecting companies based on the strength of their balance sheets, long-term debt ratios and return on assets (ROA).

10. Low Interest-Rate Sensitivity

It is a large-cap U.S. stock selected for its low volatility and positive price performance in a rising-interest-rate environment.

11. Insider and Analyst Sentiment

One of 100 top stocks out of 5,000 U.S. stocks where corporate insiders (a director or senior officer of a company, or any person or entity that owns more than 10% of the company’s stock) are buying the stock and Wall Street analysts have recently increased earnings estimates.

12. Large-Cap Momentum

The stock is part of a major hedge fund’s systematic strategy that invests in large- and mid-cap U.S. companies with positive momentum and that rank in the top third of total return over the prior 12 months, excluding the last month.

Recommendation

Buy Johnson & Johnson (JNJ) at market today. Place your initial stop at $117.00.

Options

After yesterday’s sharp rally, I am holding off on recommending options this week.

Portfolio Update

You were stopped out of Applied Materials (AMAT) at $36.00 for a 10.43% gain.

Raise your stop in Apple (AAPL) to $136.75 to lock in a 15% gain.

Raise your stop in Home Depot (HD) to $145.15 to lock in a 15% gain.

Raise your stop in Altria Group (MO) to $74.40 to lock in a 15% gain.

As I noted last week, Comcast Corporation (CMCSA) split its stock 2 for 1. The stock split also means that your March $72.50 call options are converted to the March $36.25 calls (CMCSA170317C00036250).

Sincerely,

Nicholas A. Vardy