Over the long holiday weekend, I had a chance to do some much needed reading. Given my vocation, sometimes I like to read articles that have little to do with the markets or finance as a way of recharging my batteries.

Of course, even when I partake in this guilty pleasure, there really is no way to truly escape. Somehow every story has a link or relationship to investing that I can utilize in my stock-picking mission.

This weekend, it was an article critical of a Shape magazine cover featuring a bikini-clad Faith Hill that has import for individual investors. In this particular article, the author does a really great job of highlighting the battle of fitness versus self-image.

How exactly did the 41-year-old country singer get that body? Was it photoshopped? How about plastic surgery? Is it really fair to present her in that way without the caveats, if any? The image alone implies that this woman, a busy professional with young children, managed to eat right and exercise in a way that created the image you now see on the magazine -- and that you can achieve yourself.

Wow, what pressure. The problem, of course, is that Photoshop was probably used in this instance, and if not Photoshop, then plastic surgery for certain.

So what does this have to do with investing?

This morning I awoke to the news that Johnson & Johnson (NYSE: JNJ) announced a definitive agreement to purchase Mentor (NYSE: MNT), a leading supplier of medical products for the global aesthetic market -- namely, breast implants.

JNJ is paying $31 per share, or $1.07 billion in cash, for the company. The purchase price is about double what MNT fetched in the open market on Friday.

A premium price of that magnitude in this market environment is hard to believe, but I would not bet against JNJ here. They have their pulse on the market and a copy of Shape magazine on their desk. As the baby-boomer generation ages, plastic surgery looks to be a huge market. Fueled by images like those in Shape magazine, the market is more than worthy of a premium price.

The fact that MNT was valued at the purchase price as recently as June is telling. Yes, the economy is in recession, but the desire to improve self image is alive and well.

This is a brilliant deal for JNJ. The company enters a strong market with great demographics at a time of economic weakness. Taking advantage of a strong balance sheet and rich cash flow, JNJ is a winner in this economy.

Self-image issues aside, I like this deal.

Jamie Dlugosch is a contributor to InvestorPlace.com.

Johnson & Johnson (NYSE: JNJ - option chain) shares are lower today after the medical giant announced it would acquire breast implant company Mentor (NYSE: MNT). JNJ put the price for MNT at $31 per share, more than 90% above Friday's price of $16. This kind of buyout activity could signal a couple things. First JNJ is in pretty good financial shape and second that many stocks are undervalued and that resilient companies like JNJ might be looking into making moves in the coming months. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on JNJ.

JNJ opened this morning at $57.66. So far today the stock has hit a low of $56.45 and a high of $57.82. As of 12:40, JNJ is trading at $56.49, down $2.09 (3.6%). The chart for JNJ looks bullish and S&P gives JNJ its highest 5 STARS (out of 5) strong buy ranking.

For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 7.5% return in just three weeks as long as JNJ is above $50 at December expiration. Johnson & Johnson would have to fall by more than 11% before we would start to lose money. Learn more about this type of trade here.

JNJ hasn't been below $52 at all in the past year and has shown support around $56 recently.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in MNT. He does control a bullish hedged position in JNJ.

Johnson & Johnson (NYSE: JNJ) offered to acquire breast implant maker Mentor Corp (NYSE: MNT). At $31 per share, J&J's tender offer for Mentor is a 92% premium to its closing price last Friday.

J&J plans to run the $373 million Mentor as a stand-alone business under its Ethicon division, reasoning that the skills of its 1,300 employees will strengthen J&J's presence in aesthetic and reconstructive medicine. Mentor is not just about breast implants -- mostly for cancer patient reconstruction. It is also awaiting FDA approval for face fillers, which would enable Mentor (and now J&J) to compete in the market for wrinkle treatment that Botox now dominates.

The Mentor announcement comes on the heels of a $438 million J&J deal to buy Omrix Biopharmaceuticals Inc. (NASDAQ: OMRI) giving J&J full access to products that control bleeding during surgery. The Mentor purchase is expected to cut J&J's 2009 earnings by 3 to 5 cents a share.

Mentor's stock popped 90% in response to the $1.12 billion takeover deal. This is pretty good for a day when the Dow is plunging over 300.

J&J's decision to make acquisitions in a down market looks pretty shrewd to me as long as these acquisitions eventually add to earnings.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Johnson & Johnson (NYSE: JNJ) will purchase Mentor (NYSE: MNT) for $31 per share. MNT, a supplier of medical products closed at $16.15 Friday. MNT December option implied volatility of 92 is above its 26-week average of 55 according to Track Data, suggesting larger price movement.

JNJ is recently trading at $58.24 in pre-open trading, below its close of $58.58. JNJ says: "the transaction is expected to have a dilutive impact to JNJ 2009 earnings per share of approximately $0.03 - $ $0.05." JNJ December option implied volatility of 41 is above its 26-week average of 25 according to Track Data, suggesting larger price movement.

UnitedHealth (NYSE: UNH) closed at $21.01 Friday. UNH affirmed its previous outlook for 2008 net earnings of $2.95 to $2.98 per share. UNH rolled out www.myoptumhealth.com for general public, the initiative will compete with WebMd, Mayo Clinic Revolution Health & other health-information portals. UNH December option implied volatility of 92 is above its 26-week average of 59 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Citigroup Inc. (NYSE: C) plans to sell its Japanese trust banking unit NikkoCiti Trust and Banking for about 40 billion yen ($416.7 million) as it struggles to survive the global financial crisis, according to the Nikkei. Also, a Citigroup fund, Citi Infrastructure Partners, is bidding 7.9 billion euros ($10.2 billion) to buy a Spanish highway operating firm, Sacyr Vallehermoso, the firms said on Monday. Citi shares were down over 12% by 11:30 am.

Yahoo! Inc. (NASDAQ: YHOO) and Microsoft Corp. (NASDAQ: MSFT) -- over the weekend there have been conflicting reports regarding the two. There were reports that Microsoft is going to offer $20 billion for Yahoo's search business, but then other sources said these are completely unfounded. Meanwhile, SAI posted that Sue Decker is the front runner for the CEO job at the portal company. YHOO and MSFT shares were down about 3.5% by 11:30 am.

General Motors Corp's (NYSE: GM) board met Sunday to review a restructuring plan intended to win support for up to $12 billion in emergency funding from the U.S. government, according to different reports. GM's plan includes cuts to executive pay andcould indicate that the company will ask some bond holders to accept equity and a limited cash payout to redeem the debt they hold and focus on fuel-saving technology. GM shares were down about 9% at 9 am.

[Update 8:50 am: Johnson & Johnson (NYSE: JNJ) has agreed to buy breast-implant maker Mentor Corp. (NYSE: MNT) for $1.07 billion, or $31 per Mentor share, a 92% premium to Friday's closing price. The deal, expected to close in the first quarter of 2009, is expected to have a dilutive impact to Johnson & Johnson's 2009 earnings per share of approximately $0.03 - $0.05. Of course, MNT shares are up over 88% in premarket trading. JNJ shares were down about 2.7%, but MNT's up about 90% by 11:30 am.]

Analyst upgrades:

• Keefe Bruyette upgraded MetLife (NYSE: MET) to Outperform from Market Perform as they believe the company's capital and liquidity profile are very solid relative to this week's sell-off.
  
• The firm also upgraded shares of MSCI (NYSE: MXB) to Outperform from Market Perform on valuation as they believe near-term challenges are already priced into shares.
  
• Burlington Northern (NYSE: BNI) was raised to Overweight from Neutral at JP Morgan based on valuation and strong pricing outlook.
• Costco (NASDAQ: COST) was upgraded to Buy from Neutral at Goldman.
  
• Pali Capital lifted Virgin Mobile (NYSE: VM) to Neutral from Sell.
  
• Merrill upgraded Pall (NYS: PLL) and Xcel Energy (NYSE: XEL) to buy from Neutral.

Analyst downgrades:

• Oppenheimer downgraded shares of Trimble Navigation (NASDAQ: TRMB) to Perform from Outperform as they believe the company's Engineering and Construction division is facing a challenging period due to the credit market strain.
  
• Stephens downgraded Seacoast Banking (NASDAQ:SBCF) to Underweight from Equal Weight as they believe a dilutive capital raise is possible given future losses from real estate credits in coastal Florida.

Analyst upgrades:

• Merrill believes Assurant (NYSE: AIZ) is well-positioned to weather the turmoil in the capital markets environment and cites the company's defensive characteristics for the upgrade. The firm upgraded shares to Buy from Neutral.
  
• Deutsche Bank upgraded R.H. Donnelly (NYSE: RHD) to Hold from Sell to reflect the company's cost cuts and its ability to buy back bonds at discounted prices.
  
• Citigroup raised Consol Energy (NYSE: CNX) to Buy from Hold on valuation as they are seeing no fundamental deterioration in coal.
• Research in Motion (NASDAQ: RIMM) was upgraded to Neutral from Underperform at Credit Suisse.
  Raymond James raised shares to Outperform from Market Perform.
  
• Penske Automotive (NYSE: PAG) was upgraded to Add from Neutral at Calyon.
  
• ICF International (NASDAQ: ICFI) was lifted to Overweight from Equal Weight at Stephens.

Analyst downgrades:

• Deutsche Bank downgraded Research in Motion (NASDAQ: RIMM) to Sell from Hold after the company reported Q2 results to reflect a deceleration in growth and margin pressures. RIMM's target was lowered to $70 from $120. RBC Capital downgraded Research in Motion to Sector Perform from Outperform citing reduced margin visibility and the slowing macroeconomic environment.
  
• Stephens downgraded Vitran (NASDAQ: VTNC) and Saia (NASDAQ: SAIA) to Equal Weight from Overweight to reflect the companies' deteriorating demand and pricing environment. Vitran's target was cut to $15 from $22 and Saia's was lowered to $16 from $24.
  
• Mentor (NYSE: MNT) was downgraded to hold from Buy at Jefferies to reflect continued weakness in the breast implant market and the potential for lowered guidance. Mentor's target was lowered to $31 from $36.
  
• Merrill cut ING Group (NYSE: ING) to Underperform from Neutral.
  
• CF Industries (NYSE: CF) was downgraded at Citigroup to Hold from Buy.
  
• Liberty Interactive (NASDAQ: LINTA) was lowered to Sell from Hold at Natixis.

Analyst initiations:

• Suntrust initiated Idexx Laboratories (NASDAQ: IDXX) with a Neutral rating, citing slowing organic revenue growth, valuation and a slowing lab business.
  
• Jefferies initiated Urban Outfitters (NASDAQ: URBN) with a Hold rating and $33 target. The firm prefers to stay on sidelines due to valuation and macro risks.
  
• Hersha Hospitality (NYSE: HT) was assumed with a Market Perform rating and $7.50 target at Keefe Bruyette. The firm believes near-term demand trends in New York City could slow.
  
• Ecolab (NYSE: ECL) was initiated at Baird with a Neutral rating and $54 target.
  
• KeyBanc assumed ENGlobal (NASDAQ: ENG) with a Hold rating.
  
• Piper initiated Pentair (NYSE: PNR) with a Neutral rating and $39 target.

Analyst upgrades:

• Oppenheimer upgraded shares of Cree (NASDAQ: CREE) to Outperform from Perform as they believe LEDs are beginning to gain traction in general lighting applications.
  
• Jefferies upgraded Constellation Energy (NYSE: CEG) to Hold from Underperform following the acquisition by MidAmerican Energy. The company's target was increased to $25 from $20.
  
• RBC upgraded the Banking sector to Overweight from Underweight following the governments "massive assault" on the financial crisis. RBC believes government actions that include the potential creation of a Resolution Trust Corporation, the creation of federal insurance for money market fund investors and the ban on short selling will result in higher bank stock prices through year end; Wilmington Trust (NYSE: WL), KeyCorp (NYSE: KEY) and Pacific Capital Bancorp (NASDAQ: PCBC) were upgraded to Sector Perform from Underperform.
  
• Oracle (NASDAQ: ORCL) was raised to Buy from Neutral at Piper.
  
• UBS upgraded Murphy Oil (NYSE: MUR) to Neutral from Sell.
  
• Gap (NYSE: GPS) was upgraded to buy from Neutral at Goldman Sachs.

Analyst downgrades:

• Deutsche Bank downgraded shares of Thomson Reuters (NASDAQ: TRIN) to Sell from Buy as they believe uncertainty in the financial sector will hinder growth.
  
• Piper cut MIPS Technologies (NASDAQ: MIPS) to Neutral from Buy as they believe estimates are at risk following the departure of ChipIdea's co-founder. The company's target was lowered to $3.70 from $8.
  
• Jefferies downgraded GSI Commerce (NASDAQ: GSIC) to Hold from Buy on valuation as they view the risk/reward less compelling following the recent rally.
• Host Hotels (NYSE: HST) was downgraded at Baird to Neutral from Outperform.
  
• Wachovia downgraded Accenture (NYSE: ACN), Cognizant (NASDAQ: CTSH) and Infosys (NASDAQ: INFY) to Market Perform from Outperform.

Analyst initiations:

• Jefferies initiated Abercrombie & Fitch (NYSE: ANF) with an Underperform rating and $38 target and thinks the company's sales and margins are at risk with negative comp trends getting worse.
  
• Cantor believes Lawson Software (NASDAQ: LWSN) has a powerful franchise while the stock trades at a 33% discount to peers. Shares were assumed with a Buy rating and $8 target.
  
• Stanford started Mentor (NYSE: MNT) with a Buy rating and $32 target and thinks the company is poised to benefit from growing global demand for products and services that make people look younger and more attractive.
• Scripps Networks (NYSE: SNI) was initiated at UBS with a Neutral rating and $43 target.
  
• BMO Capital initiated Costco (NASDAQ: COST) and BJ's Wholesale (NYSE: BJ) with Market Perform ratings and a $72 target and $42 target, respectively.
  
• Isle of Capri (NASDAQ: ISLE) was initiated at Goldman with a Sell rating and $6 target.

MOST NOTEWORTHY: Morgan Stanley, AstraZeneca and Lowe's were today's noteworthy downgrades:

• Goldman Sachs downgraded shares of Morgan Stanley (NYSE: MS) to Neutral from Buy as it believes declines in capital markets and commercial real estate, coupled with additional investment writedowns, will impact near-term earnings.
  
• AstraZeneca (NYSE: AZN) was lowered to Neutral from Overweight at HSBC. The firm expects further negative pressure on shares with the 30-month stay on an FDA approval of generic versions of low dose Seroquel set to expire in April 2008.
  
• Citigroup downgraded Lowe's Companies (NYSE: LOW) to Hold from Buy as it believes a Q4 miss and 2008 guidance will likely pressure shares in the near-term.

OTHER DOWNGRADES:

• Friedman Billings downgraded TiVo (NASDAQ: TIVO) to Underperform from Market Perform.
  
• Merriman downgraded Mentor Corp (NYSE: MNT) to Neutral from Buy.
  
• Goldman removed ProLogis (NYSE: PLD) from its Conviction Buy List.

MOST NOTEWORTHY: PSS World Medical (PSSI), Rockwell (ROK), Open Text (OTEX), Sanderson Farms (SAFM) and Mentor (MNT) were today's noteworthy upgrades:

• PSS World Medical (NASDAQ: PSSI) was upgraded to Outperform from Neutral at Robert W. Baird. Baird said the quarter was impacted by one-time items and that core operations remain strong while private label, home care and HCIT initiatives may contribute to substantial margin improvement.
  
• Friedman Billings added Rockwell Automation (NYSE: ROK) to its Top Picks list based on valuation and growth drivers.
  
• Merrill Lynch upped shares of Open Text Corporation (NASDAQ: OTEX) to Neutral from Sell. Kaufman Brothers upgraded shares of the stock to Buy from Hold with a $27 target to reflect the company's better-than-expected Q4 results.
• Sanderson Farms Inc (NASDAQ: SAFM) was upgraded to Strong Buy from Strong Sell on valuation and accelerating sales of the company's poultry products.
  
• The firm upgraded shares of Mentor Corporation (NYSE: MNT) to Buy from Sell given the company's good performance and low risk.

OTHER UPGRADES:

• Cache Inc (NASDAQ: CACH) was upgraded to Buy from Neutral with a $19 target at First Albany and to Outperform from Market Perform at Piper Jaffray.
  
• Gabelli upgraded shares of Diageo (NYSE: DEO) to Buy from Hold.
  
• RBC Capital Markets raised shares of Knology Inc (NASDAQ: KNOL) to Outperform from Sector Perform.
  
• Goldman Sachs upgraded shares of Maxygen Inc (NASDAQ: MAXY) to Neutral from Sell.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Specialty pharmaceutical companies make up today's most noteworthy list:

• The Bank of America initiated Shire plc (NASDAQ: SHPGY), Mentor Corp (NYSE: MNT), Alcon, Inc (NYSE: ACL) and Allergan, Inc (NYSE: AGN) with Buy ratings and initiated Cephalon, Inc (NASDAQ: CEPH), Forest Laboratories, Inc (NYSE: FRX), Sepracor Inc (NASDAQ: SEPR) with Neutral ratings. Bank of America's top pick is Shire plc as the firm expects the company to launch six products or product extensions by mid-2008, followed by Mentor Corp, as the conversion to silicone breast implants should drive a period of stronger-than-expected sales and earnings.

OTHER INITIATIONS:

• Ford Motor Co (NYSE: F) was initiated at Buckingham with an Underperform rating and General Motors (GM) was started with a Neutral rating.

• Nollenberger believes Under Armour, Inc (NYSE: UA), started with a Buy rating, is positioned to outperform the market based on the strength of its brand name and demand through the continued introduction of new products along with European growth.

• Barr Pharmaceuticals, Inc (NYSE: BRL) was initiated with an Equal Weight rating and $53 target at Morgan Stanley.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).