Last week, I provided a bull pick and a bear pick each day and really enjoyed the process. This week I will do something a little different, but still include a daily stock. I want to highlight four different industries and give you my favorite stock in each group. Today I will start with the pharmaceutical sector.
Making money in the drug sector has been hard to come by for over a decade now and I am still not in love with the industry. Drugs coming off patents are always an issue and there seem to be fewer blockbusters to replace them these days. Also, the competition with generic drugs is fierce and not going anywhere anytime soon. That being said, I am going to suggest an old reliable as my pick for this group: Johnson & Johnson (JNJ).
Tylenol Shouldn’t Be Headache
The company has made some negative headlines lately with their voluntary Tylenol recalls, but it should not have a material impact on the company’s long-term results. Management stated that it did impact results last quarter, but they still were adequate. In fact, the company did report pretty solid results for the third quarter. It earned $1.23 per share which was eight cents above the estimate from analysts. Earnings growth wasn’t great, but strong growth wasn’t expected with the weak economy.
The great news from the report is that they raised guidance for the full year to between $4.70 and $4.80 per share, up from $4.65 to $4.75. It’s no doubt that the weak dollar has helped its massive international operations. Current-year earnings estimates have increased three cents to $4.73 per share over the past week.
Shot in the Arm
JNJ’s vaccine business got a shot in the arm recently after it announced the acquisition of Crucell. JNJ already owned 18% of the company before acquiring the whole thing. Crucell was an attractive target due to its growing vaccine business, especially to the emerging markets.
I like the steadiness of the stock and the strong dividend yield of 3.4%. Also, the stock could outperform in the near term if the market undergoes a well-deserved correction. Buyers have been euphoric over the past two months in anticipation of the Fed buying up everything in sight, so a swift drop could be in the cards. This stock will weather that storm quite well.
Healthy Druggie is an article from: 
