A Dozen Reasons to Buy Johnson & Johnson
03/14/2017 7:00 am EST
For our latest recommendation, we are revisting a previous pick with big momentum — Johnson & Johnson (JNJ), which is currently the single most popular position among the strategies we monitor, explains Nicholas Vardy, editor of Alpha Algorithm.
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.
The Alpha Algorithm system simultaneously tracks 20 of the most effective investing strategies ever developed. Currently, 12 different top investment strategies are currently betting on Johnson & Johnson:
High Quality Stock
The stock exhibits positive fundamentals, including high return on equity, stable year-over-year earnings growth and low financial leverage.
It is a top U.S. stock based on fundamentals that are measured by book value, cash flow, sales and dividends.
The stock is among those that have increased dividends for at least 25 consecutive years.
Hedge Fund Alpha
Based on publicly available disclosures, successful hedge fund managers are investing in the stock.
It is one of the five highest-yielding stocks among each of the 10 sectors tracked in the S&P 500.
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.
Selected using a multi-factor modeling approach, this is a value stock designed to enhance portfolio risk/return characteristics.
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.
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).
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.
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.
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.