We’re buying small in the market carnage, picking our lanes to put cash to work
We’re buying 50 shares of Johnson & Johnson (JNJ) at roughly $171.51 each. Following Monday’s trade, the portfolio will own 250 shares of JNJ, increasing its weighting to 1.55% from 1.22%. The broader markets are selling off hard Monday as concerns about inflation, rising interest rates, and a wipeout of value in cryptocurrencies have investors and traders rushing out the door and taking off risk. There continues to be a lot of pain in owning stocks right now, but we still think a broad-based selloff like Monday is creating a long-term opportunity in stocks that have little to do with the market’s primary concerns of the moment. Our focus continues to be to use weakness to scoop up high-quality, dividend-paying stocks that are industry leaders; ones with little economic sensitivity and a pristine balance sheet that can weather any type of storm that comes its way. These are qualities we have been emphasizing for months and have high-graded the portfolio into. Even though we like these types of stocks for the long term, we understand how volatile the market is right now, and that’s why we cannot simply buy them all at once. Patience and discipline are required. This is why our plan of action to start the rough week is to pick one stock to buy small and then patiently wait to see where the market goes from here. Now that our trading restrictions have cleared, we are buying the 50 shares of Johnson & Johnson that we wrote about last Friday . As we talked about last week, we think J & J is a great slowdown play because each of its three businesses have little to no economic sensitivity. Reflecting some of that, shares of J & J were only down modestly when the market overall was getting clobbered. Take for example J & J’s Pharma business, which is one of the best out there and growing faster than the industry rate. Supporting J & J’s growth outlook is its strong pipeline, which features 13 new drugs that are expected to be filed for approval between now and 2025. Or you could look at its Medical Device business, which is going through a resurgence in growth thanks to the recovery in elective procedures that were delayed during the pandemic. Johnson & Johnson also has a stable Consumer Products business, which is best known for its iconic brands like Neutrogena, Tylenol, Listerine, and Johnson’s. Demand for these products should remain resilient in a consumer spending slowdown. What also has us interested in J & J is its upcoming breakup. The company announced last November its plan to separate the consumer unit from its faster-growing and best-of-breed pharmaceutical and medical device businesses. We believe this breakup makes a lot of strategic sense as the two independent, market-leading companies will become more focused. Management will be able to move faster and more effectively allocate capital as they navigate different industry trends to meet the needs of their customers and patients. (Jim Cramer’s Charitable Trust is long JNJ. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
