The Alpha Algorithm Chooses the Bluest of Blue Chips

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

This week’s Alpha Algorithm generated a recommendation that many long-term investors just “buy and hold” forever. After all, Johnson & Johnson (JNJ) has not only outperformed the broad-based S&P 500 in 2016, but also over five-year and 10-year periods as well.

Founded in 1885 and based in New Brunswick, New Jersey, Johnson & Johnson manufactures and sells various products in the health care field worldwide. It offers consumer products that have become household names such as Listerine, Tylenol and Sudafed. It also operates in the pharmaceutical and medical devices areas as well.

 

JNJ (blue) vs. the S&P 500 (red) over one year
JNJ (blue) vs. the S&P 500 (red) over one year

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

1. High Quality Stock

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

2. Fundamental Strength

A top U.S. stock based on fundamentals measured by book value, cash flow and sales 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.

Recommendation

Buy Johnson & Johnson (JNJ) at market today.

Place your initial stop at $102.00.

Options

Since I tend to recommend options only when the stock has pulled back in the midst of an uptrend, I am holding off on recommending options this week.

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