We’re putting cash to work in Friday’s market decline, adding to one of our defensive stocks
We’re buying 30 shares of Johnson & Johnson (JNJ) at roughly $160.83 each. Following Friday’s trade, Jim Cramer’s Charitable Trust will own 505 shares of JNJ, increasing its weighting in the portfolio to 2.98% from 2.81%. This small Johnson & Johnson add into Friday’s broader market selloff is putting back to work a portion of the money we raised earlier in the week in anticipation of the rally fizzling out in the immediate term . We’re picking up some more shares of J & J on to beef up the defensive side of our portfolio. Each of its three businesses — pharmaceuticals, medical devices, and consumer products — have very little economic sensitivity. But there’s more to the Johnson & Johnson story than defensive growth. J & J is in the process of splitting in two — through the separation of its consumer unit from the pharmaceutical and medical device business. We have long said 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. Breaking up can be hard to do, but sometimes businesses are better separated than they are together. In J & J’s case, it is the decision best for the future of the company. Lastly, Johnson & Johnson is a high-quality type of company we like to turn to when the economic picture looks uncertain. It has a pristine balance sheet, pays a solid dividend with its 2.8% annual yield, and management looks at share repurchases as another way to boost total shareholder returns. Last month the company announced a new $5 billion share buyback program. (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.
