Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Picks Report.
Johnson & Johnson (NYSE: JNJ) is the top conservative investment for 2007 from value investor Nathan Slaughter, editor of Half-Priced Stocks. He notes, "The company has been remarkably consistent, posting double-digit earnings growth every year for the past two decades and increasing revenues for more than 70 consecutive years.
"Obviously, that span covers some difficult economic environments, and JNJ has proven that it can keep moving forward even under challenging operating conditions. The company has been a cash-generating machine, churning out more than $10 billion in free cash flow over the past year.
"Management returns much of that wealth to shareholders every year. The company announced a $5 billion share repurchase program, and dividends have been hiked at an impressive 15% annual clip over the last five years. In fact, regardless of the health of the economy, the company has had the financial strength to lift its annual payouts for the past 43 consecutive years.
"How is J&J able to be such a consistent performer? The answer lies in its ability to be a leader in three of the firm's business segments, consumer products, medical devices and diagnostics, and pharmaceuticals. Meanwhile, JNJ is trading at a sizable discount to its $81 fair value estimate (based on discounted cash flow analysis).
"Bottom line: This diversified, cash-rich, and well-managed company has an amazingly consistent track record. Furthermore, rain or shine, favorable demographics should keep its product lines (many of which enjoy a dominant market share) moving briskly forward in the years ahead. At current prices, I feel comfortable owning this venerable 119-year-old leader, and believe it will continue to flex its muscles -- even in a down market."
To see Nathan's favorite speculation for 2007, click here.
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Reader Comments (Page 1 of 1)
1-01-2007 @ 4:25PM
Bonnie Lynch said...
Verizon (VZ) is one of my strong picks for 2007 due to their good cash flow and growth with their addition of $18 billion of fiber optic cable lines to support the expansion of telecommunication...many steps ahead of their competitors.
Another top pick of mine is Las Vegas Sands (LVS) with its expansion in Asia of gambling casinos where gambling is an addiction and a hot market. Gambling is a major way of life, especially in China. LVS involvement in new casinos in Asia will generate real cash flow of great magnitude.