Part 2

The recent steep market selloffs present a tremendous long-term buying opportunity for investors

As usual after we complete our ETF pair analysis we pick the two best stocks in each ETF that have the highest probability of beating the market in the current environment.

One of our top-stock picks from the SPY for the month of April is Johnson & Johnson (JNJ).

Johnson & Johnson (JNJ)


J&J is the world’s largest healthcare company with a rich business mix of three key segments including – Pharmaceutical, medical devices and consumer health. The reason why J&J’s stock is so valuable in uncertain market times with higher than average volatility is associated with the fact that the company will continue to see strong demand for its products regardless of the current or future state of the economy, as healthcare expenses are not really a choice for those who need medications, therapies, etc. but rather a necessity. This makes J&J the perfect recession-proof blue chip stock for any portfolio.

The company has been at the forefront of the COVID-19 vaccine race, with exceptionally high chances of winning it. Johnson & Johnson recently announced a landmark new partnership with U.S. Department of Health & Human Services and further made a commitment to supply one billion vaccines worldwide for emergency pandemic use.

In 2019, J&J generated $82.1 billion in sales, half of which came from pharmaceuticals. Products in the segment cover infectious diseases, immunology, oncology, neuroscience, and cardiovascular, among others. Medical device was the second-largest segment, contributing roughly one-third to J&J’s 2019 sales. As a company, J&J has always focused on delivering strong organic growth numbers by investing heavily in R&D instead of spending big money on acquisitions.

There is another important factor that makes Johnson & Johnson special as a company and that is the fact that all three of its operating segments bring something to the table that its other operating segments may lack. The Consumer health products, is a slow-growing segment, but it offers some of the most predictable cash flow and solid pricing power. On the other hand you have the medical devices, which may be struggling with commoditization and fierce competition, but is well-positioned to benefit over the long run from an aging global population and improved access to medical care. Then last but not least is the pharmaceuticals segment, which generates the bulk of J&J’s margins, but is also constrained by the finiteness of patent exclusivity. The fact that J&J is so well-diversified as a company makes it a great choice for both large institutional investors as well as for small retail traders who want to enjoy steady growth for the years to come.

We will start opening our BUY positions on the stock around the $132-134 support area and will look to collect our profits at the $147 and $158 levels respectively. The strongest immediate support lies at the $127 level and in case we see a break there, then the stock will head down to the March 23rd lows at $118, where we will be interested in buying again.

One of our top-stock picks from the XLC for the month of April is AT&T (T)

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