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.

Yesterday, Johnson & Johnson (NYSE: JNJ) was downgraded by JP Morgan as reported by my colleague Melly Alazraki in Johnson & Johnson (JNJ) downgraded - really?.

I wanted to further elaborate on some issues because of the position Johnson & Johnson holds in our hearts, and many of our portfolios. I should also point out that the downgrade did have a caveat, the analyst believes the stock may very well regain strength toward the end of 2009.

JPM believes Johnson & Johnson is expensive relative to it's peers. That should be expected from my point of view because it is considered the measure of a safe haven in our uncertain times. The tougher the economy becomes the more one should expect JNJ to separate itself from others.

Johnson & Johnson (NYSE: JNJ) was downgraded by JP Morgan from Overweight to Neutral. While Michael Weinstein, the JP Morgan analyst, makes a good case, I can't help but questioning the call, having been such a big fan of the company for so long.

J&J has been one of the best performers this past difficult year. While the S&P 500 declined 36% year-to-date, and the Dow Jones Industrial Average (of which J&J is a component) declined nearly 32% YTD, JNJ declined only 8% YTD. Over the past year, JNJ's performance is even more remarkable, with a 5.6% decline compared with the S&P's 39% and the Dow's 34.6%.

J&J has been hailed as a defensive stock -- "a super stock. Well managed, great earnings, good pipeline," the world's most respected company, "a drug company and so much more." And these are just from BloggingStocks contributors. So what's this analyst's beef?

Procter & Gamble (NYSE: PG), which competes with Clorox (NYSE: CLX), Johnson & Johnson (NYSE: JNJ), Kimberly-Clark (NYSE: KMB), and Colgate-Palmolive (NYSE: CL), will be reporting earnings for the fiscal first quarter on Wednesday. The data will be scrutinized carefully to see if P&G might be a viable idea in these tumultuous times. Of course, P&G is a great long-term investment for a core portfolio of buy-and-hold stocks, but there will be plenty of investors on Wall Street looking to gauge the company's potential as a defensive trade.

According to Earnings.com, P&G should earn about $0.98 per share. At least, that's the goal that analysts have set for management. If P&G hits that number, then it will have achieved a modest growth rate of around 6%. I expect P&G to beat expectations by a penny or two, given its recent history. The company usually is pretty good about that. Also, free cash flow should be more than acceptable to investors. Management watches cash-flow generation carefully (as it should), and traditionally makes that a priority. Naturally, it wants to balance the needs of long-term growth along with the need to deliver a proper flow of cash. So far, things have worked out over time on that count.

The big question now is: What about the future outlook? What the company says about this subject will probably end up driving the stock's reaction. The global marketplace is headed for a slowdown. Consumers are tightening their belts. Will they reach for generic brands and ignore the brand equity of the products in P&G's vast portfolio? P&G is going to have become aggressive about promoting its stuff. The company will want to make sure that people still feel their getting value for their dollar. That dollar, after all, goes farther with a generic equivalent. From my viewpoint, I think there is still value to be had from name brands. Even during a recession, I'll buy better quality items. Just yesterday I happened to pick up one of P&G's family members -- Bounty paper towels. It was on sale, but I'm sure there was a generic lurking around the corner that was cheaper. I didn't even bother looking for it. Sure, I do buy some generics, but I don't necessarily become obsessed with them.

P&G wasn't that far from the 52-week low at Monday's close. I wouldn't be setting up an earnings trade ahead of it because of all the uncertainty, but holders of the stock should fare reasonably well come the middle of the week (P&G did fine the last time).

Disclosure: I don't own any company mentioned; positions can change at any time.

Johnson & Johnson (NYSE: JNJ - option chain) shares are rising today after the company reported third-quarter earnings of $1.17 per share, which beat estimates of $1.11. Revenues were $15.9B as opposed to $15.7 billion expected and JNJ lifted its full year forecast by about a nickel as well.

Defensive names like JNJ typically perform better than the rest of the market in weak economic times, and this morning's results show that to still be true for JNJ. 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 $66.50. So far today the stock has hit a low of $64.15 and a high of $67.48. As of 12:35, JNJ is trading at $64.65, up $1.97 (3.1%). The chart for JNJ looks bearish but S&P gives JNJ a 5 STARS (out of 5) strong buy ranking.

For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $50 range.

There's no question that Johnson & Johnson (NYSE: JNJ), whose corporate colleagues include Merck (NYSE: MRK), Pfizer (NYSE: PFE), and Procter & Gamble (NYSE: PG), is a respected institution on Wall Street. It's a proud member of the Dow, and we all know the company's products: Band-Aid, Listerine, etc. J&J also makes diagnostic equipment and pharmaceuticals. It's truly a respected icon, as Steven Halpern found out.

Investors will be digging through J&J's third-quarter numbers next Tuesday, looking not only for signs about the economy but for signs about J&J itself. After all, everyone wants a defensive stock in their portfolios. A lot of companies aren't looking so defensive these days. Could J&J be the one?

According to Earnings.com, you shouldn't get too excited in terms of growth. The call for the bottom line is $1.11 per share. That would only represent low single-digit percentage growth. Of course, these days, that might be exciting enough. As to whether or not the bottom line will beat the analysts, I suppose the game is completely changed at this point, but I figure J&J will pull through on that count. It all depends on how much we can trust history given the brave new economic world we are suddenly faced with. According to this earnings analysis source at AOL Finance, J&J beat estimates the last four times at bat. Due to this strong recent trend, I'll assume J&J will deliver the goods.

So, let's assume J&J does please the Wall Street analysts. What then? Well, it's really going to be the outlook that's going to tell the ultimate tale. We'll have to see if management is going to give some positive thoughts during the conference call. What does management think about commodity costs and margins? What about the cash flows? Then there's the dividend and the share-repurchase program, two things which investors of J&J count on for long-term value. Management had a few things to say about these issues the last time around (please see the following transcript of the Q2 conference call). I think management is going to be cautious, but I don't feel that there will be any disastrous notes struck during the discussion with analysts.

The Dow Jones is down around 300 points again (Update: closed down 450) so it's time to revisit my stable stock picks to see how they are holding up. Each of my five picks is beating the market and all of them are up despite crushing news in the financial sector every day since my last report.

The prediction business is highly speculative, but I gave it a try anyway, searching for stocks that would hold their value. This update is a spot-check of my earlier post, Serious Money: Five stable stocks for troubled times. The closing prices are from yesterday but these companies are doing well in today's down market too as the government steps in again and bails out AIG with $85 billion.

The standard for comparison is the Standard & Poor's 500 Index, which closed on June 30, 2008 at 1,280.00. The S&P closed yesterday at 1,213.59, down 5.47%. The percentage gains for the stable stocks do not include dividends. They are up 4% for a 9.47% advantage. The volatility in the market today may alter some of the data points so expect an after market update. Update: the following five stocks remain ahead of the market but they did turn down in the last hour.

1) Johnson and Johnson (NYSE: JNJ) -- when recommended, the stock closed at $64.34 and paid a 2.89% dividend yield. It finished at $69.80 -- up 8.48% -- and is trading up this morning. JNJ was featured in Barron's this week as the most respected from the top 100 companies in the world. Final Update: down $-0.29 to $69.51

2) Teva Pharmaceuticals ADR (NASDAQ: TEVA) -- when recommended, the stock closed at $45.80 and paid a 1% dividend yield. It finished at $45.96 -- no change -- and is trading slightly down this morning. Teva is the largest generic drug company in the world and just got bigger throught the acquisition of Barr Pharmaceuticals. Final Update: down $-1.25 to $44.11

I was out all morning and returned to my desk to find employment and retail numbers sent the Dow Jones Industrial Average tumbling down 345 points today. That made me think it was important to check out how stable my stable stocks -- stocks with the ability to ride out this bearish run -- were doing in bad times.

This update is a spot-check of my earlier post Serious Money: Five stable stocks for troubled times, to see how my picks are holding up so far. Closing prices are for today.

The standard for comparison is the Standard & Poor's 500 Index, which closed on June 30, 2008 at 1,280.00. The S&P closed today at 1,236.82, down 3.37%. The percentage gains do not include dividends. Four out of five of my picks beat all the indices; CB was close.

1) Johnson and Johnson (NYSE: JNJ) -- when recommended the stock closed at $64.34 and paid a 2.89% dividend yield. It finished at $70.45 -- up 9.5%

2) Teva Pharmaceuticals ADR (NASDAQ: TEVA) -- when recommended the stock closed at $45.80 and paid a 1% dividend yield. It finished at $47.92 -- up 4.63%.

Well, the market was in the dumps yesterday and is even worse today. So this may be a good time to check on my list of stocks for those looking for equities that are stable enough to ride out this bearish storm.

This update is a spot-check of my earlier post Serious Money: Five stable stocks for troubled times, to see how my picks are holding up so far. Closing prices are for August 12, 2008.

The standard for comparison will be the Standard & Poor's 500 Index, which closed on June 30, 2008 at 1,280.00. The following are the five stocks with closing prices from July 1.

1) Johnson and Johnson (NYSE: JNJ) -- when recommended the stock closed at $64.34 and paid a 2.89% dividend yield. It finished at $71.70 -- up 11.44%

2) Teva Pharmaceuticals ADR (NASDAQ: TEVA) -- when recommended the stock closed at $45.80 and paid a 1% dividend yield. It finished at $46.41-- up 1.3%.

3) Chubb Corp. (NYSE: CB) -- when recommended the stock closed at $49.01 and paid a 2.64% dividend yield. It finished at $48.39 -- down 1.26%.

If Barack Obama is receiving advice from "my pal Warren" then he must not be listening. There is no way that Warren Buffett, the national debt hawk, would support Obama's stupid idea of giving another $1,000 back to every family in America. It is reported that he would pay for this by creating a windfall profit tax on oil companies.

This give-away program is an attempt to buy votes plain and simple. It would add to the national debt, discourage oil companies from investing and worse it would handicap American companies more than others and mortgage more of our children's futures.

The last thing the people of the United States need is more deficit spending. If we did tax oil companies, which I am against, I would only support using the funds for expanding education, research and development in science and engineering with the goal of maintaining our waning leadership in technology.

Johnson & Johnson (NYSE: JNJ)
Q2 2008 Earnings Conference Call
July 15, 2008 8:30 AM ET
Management Summary

Operator

Welcome to the Johnson & Johnson second quarter 2008 earnings conference call. (Operator Instructions) I would now like to turn the conference call over to Johnson & Johnson.

Louise Mehrotra, Vice President of Investor Relations

Good morning and welcome. I'm Louise Mehrotra, Vice President of Investor Relations for Johnson & Johnson, and it is my pleasure this morning to review our business results for the second quarter of 2008. With me on the call today is Dominic Caruso, Vice President of Finance and Chief Financial Officer.

A few logistics before we get into the details. This review is being made available to a broader audience via a webcast accessible through the investor relations section of the Johnson & Johnson website. The press release that was sent to the investment community earlier this morning includes the schedule showing sales for major products and/or business franchises to facilitate updating your models. The press release is also available on the Johnson & Johnson website. I will review highlights of the second quarter 2008 results for the corporation and for our three business segments. Following additional remarks from Dominic, we will open the call to your questions. We expect the total call to last approximately one hour.

Johnson & Johnson (NYSE: JNJ) shares rose over 2% by 12:45 on a day the market saw some scary dips earlier and the S&P 500 is still in the red.

The health-care giant is rising after it reported its second-quarter financial results, posting an 8% growth in profit to $1.18 per share (excluding one time charges) and a 9% increase in total revenue to $16.45 billion. The results handily beat analyst expectations (according to Thomson Financial) of $1.12 per share, on revenue of $16 billion. Not only that, but the company also increased its 2008 earnings forecast.

J&J execs claim the company wasn't being significantly hurt by the weakened U.S. economy, and judging from the effect of the lower dollar, which was responsible for 5.6% of the 9% higher revenue, perhaps they're right. Still, the company can't ignore that while international sales jumped 16.2%, U.S. sales increased only 2.1%.

But among the different pharmaceutical companies, it seems there is little doubt that J&J is better poised to ride this global economic downturn; as opposed to to pure-play pharmas, J&J has a more diversified business model. Already the difference was clear in this quarter's results and will probably make even more of a difference in the future, as many pharma companies lose sales to generic drug makers when products go off patent.

Updating the story with the final numbers heading into the week end. The market looked sad again today, so I thought I would spot-check Serious Money: Five stable stocks for troubled times, to see if my picks, (suggested watchlist considerations) were holding up...so far so good, sort of...

The standard for comparison will be the Standard & Poors 500 Index, which closed on June 30, 2008 at 1,280.00. The following are the five stocks with closing prices from July 1.

1) Johnson and Johnson (NYSE: JNJ) closed at $64.34 and pays a 2.89% dividend yield. (NOW $66.53 -- up 3.4%) finished at $66.26 -- up 2.98%.

2) Teva Pharmaceuticals ADR (NASDAQ: TEVA) closed at $45.80 and pays a 1% dividend yield.( NOW 42.58 -- down 7%) finished at $41.78 -- down 8.78%.

3) Chubb Corp (NYSE: CB) closed at $49.01 and pays a 2.64% dividend yield. (NOW $47.51 -- down 3%) finished at $47.56 -- down 2.96%.

After seeing the interest in yesterday's Serious Money: Five stable stocks for troubled times, I decided to track the stocks on a quarterly basis to see how they hold up over time (otherwise, what would be the purpose of discussing them in the first place?).

I said that all five have shrewd, conservative management teams and have been in the right place, at the right time -- and prepared. The standard for comparison will be the Standard & Poors 500 Index which closed on June 30, 2008 at 1,280.00. Although my original story was published yesterday, I will be using the second quarter end point for my five stocks as well.

1) Johnson and Johnson (NYSE: JNJ) closed at $64.34 and pays a 2.89% dividend yield.

2) Teva Pharmaceuticals ADR (NASDAQ: TEVA) closed at $45.80 and pays a 1% dividend yield.

3) Chubb Corp (NYSE: CB) closed at $49.01 and pays a 2.64% dividend yield.