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Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 Rocket Stocks You Should Buy as Stocks Bounce

Johnson & Johnson is best known for is consumer health care products, with items such as Band-Aid brand bandages and Tylenol in its product portfolio. But the firm's bread and butter comes from less consumer-driven pharmaceuticals and medical device sales, which generate a combined 78% of sales. That product diversification provides a huge advantage for JNJ, especially as investors remain anxious about the economic recovery.

Financially, Johnson & Johnson boasts a strong balance sheet with more than $5 billion in net cash (the number was higher before the acquisition of Synthes, a Swiss medical device maker that JNJ finalized last summer for almost $20 billion). With rising analyst sentiment adding onto JNJ's 2013 rally, we're betting on shares this week.

American Express

The financial sector has enjoyed some stellar performance of late, and American Express (AXP) has been no exception. Shares of the $73 billion payment network have rallied 15% already this year. American Express is the biggest of the vertically integrated payment networks; the firm has a hand in everything from retail and commercial banking to network operation to card issuing. That makes Amex stand apart from peers such as Visa (V) and MasterCard (MA), which only run payment networks.

American Express boasts impressive brand positioning. The firm's flagship charge card products feature faster turnover than typical revolving credit lines, and they attract a more affluent consumer. That's why even though Amex has fewer customers than Visa or MasterCard, Amex's cardholders spend more money. That translates into higher revenues for American Express. And because AXP charges merchants dramatically higher rates to accept payments than other card networks, Amex sports thick net margins.

A rising tide of electronic payment adoption should benefit all payment network firms over the next few years -- there's no shortage of customers for this market. That said, Amex's market positioning courting more affluent (and spend-centric) consumers should ensure that the firm continues to grab the cream of the cardholder crop. To be sure, issuing cards does add significant risk to AXP's balance sheet -- but with a better handle on risks now, the firm also stands to earn much more for its trouble.

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