With a bleak economic outlook, I like to focus on certain sectors and themes in making my investment decisions, and I find the health-care sector to be particularly attractive now.
Americans spend more on their health care year after year, and with Baby Boomers aging, the sector should continue to experience spectacular growth. Furthermore, the focus on increased access to health care will only yield higher amounts of spending.
One company I continually turn to in the field is
Johnson & Johnson
I first bought deep in-the-money calls in Johnson & Johnson after a tumultuous period for stocks in early March.
The company operates in a variety of areas within the health care field, including the research and development of pharmaceuticals and medical devices. The company has a steady revenue base both at home and abroad, and with the dollar showing historic weakness, foreign revenue has the potential to increase profits back home dramatically.
In July, Johnson & Johnson reported 9% growth in second-quarter profits, leading to a nice boost in the share price. Steady growth should continue with such a diverse array of products in the health-care field.
The numbers do not lie: Johnson & Johnson brings in over $57.0 billion in revenue, it has a forward P/E of 15, a solid return on equity of 25.24%, $6 billion in cash, and to put an exclamation point on the health care behemoth, free cash flow rolls in at over $8.6 billion. This company dominates, period!
More recently, the stock broke key technical resistance level at $65. Such a move makes for an opportune DITM call play. With that in mind, I will place a limit order to buy 10 contracts of the April 55 calls (JNJDK) for $11.50, or better. The stock closed at $65.70 on Friday.
Game of Life
The last time the Philadelphia Phillies participated in the post season, a scrappy dude with a perpetually dirty uniform who answered to "Nails" was patrolling center field and leading off.
Yes, it was 1993, fourteen years ago, when I was fortunate enough to be a member of a special Phillies team that unfortunately exited the World Series on the wrong side of Joe Carter's walk-off home run.
Alas, after nearly a decade and a half, the drought is finally over. The Fightin' Phils, beset by injuries to key players through the year and possessors of a suspect pitching staff, somehow managed to persevere, culminating with yesterday's victory over the Nationals.
The victory, coupled with the Mets loss to the Marlins, allowed the Phils to claim the NL East crown. On the other hand, the Mets, who sat atop the NL East for 160 games, and had a seven game lead with 17 games remaining, will not be participating in the playoffs this year.
Obviously, Jimmy Rollins knew something when he proclaimed, in the preseason, that the Phillies were "the team to beat in the NL East."
The Phillies will open the playoffs at home, on Wednesday; however, their opponent remains to be determined as the Padres and Rockies will vie for that opportunity today, in a one-game playoff to decide the NL Wild Card. The surprising Arizona Diamondbacks will host the Chicago Cubs in the other NL series.
The AL playoffs will see the Yankees, winners of the wild card, opening up in Cleveland, against the Indians. In the other AL series, the Angels will square off against the Red Sox in Boston.
In the NFL, Dallas, Indianapolis, and Green Bay remain undefeated after yesterday's games. New England can remain in that club with a victory tonight over Cincinnati. Pittsburgh suffered its first defeat yesterday, at the hands of Arizona. San Diego, who lost to Kansas City, now has three losses in four games, more than it had all of last year.
Despite replacing Rex Grossman with Brian Griese, the Bears lost to the Lions. Brett Favre, the poster boy for toughness and perseverance, broke Dan Marino's career mark for touchdown passes, when he threw number 421 yesterday.
On the college gridiron, the top-ranked USC Trojans traveled to Washington, whereupon they eked out a victory over the Huskies. Meanwhile, five teams in the top ten, lost this weekend, thereby throwing the polls into total disarray. The Fighting Irish of Notre Dame lost again, this time to cross-state rival Purdue and remaind winless at 0-5.
The President's Cup, pitting the U.S. against an International team, took place in Montreal, Canada over the past four days. The US squad, captained by Jack Nicklaus, won rather comfortably over their International counterparts, captained by Gary Player.
In China, the US Women's Soccer team, rebounded from their worst loss in World Cup history, to claim the bronze medal, with a 4-1 victory over Norway. Brazil, who inflicted that 4-0 defeat on the Americans, lost to Germany in the championship game.
With the victory, the German women became the first back-to-back champions in the history of the Women's World Cup.
The Players Club recognizes and appreciates the resiliency of athletes and teams, particularly when the ultimate prize is denied. Nonetheless, a strong foundation is required in order to bounce back from adversity, and claim the next best prize available.
By guaranteeing recurring cash flow, through our strategic partner, The Players Club endeavors to provide the financial foundation that will permit our members to pursue whatever prizes they desire.
Always remember: Life is a journey, Enjoy the ride!
At the time of publication, Dykstra had no positions in stocks mentioned.
Nicknamed 'Nails' for his tough style of play, Lenny is a former Major League Baseball player for the 1986 World Champions, New York Mets and the 1993 National League Champions, Philadelphia Phillies. A three time All-Star as a ballplayer, Lenny now serves as president for several privately held businesses in Southern California. He is the founder of The Players Club; it has been his desire to give back to the sport that gave him early successes in life by teaching athletes how to invest and protect their incomes. He currently manages his own portfolio and writes an investment strategy column for TheStreet.com, and is featured regularly on CNBC and other cable news shows. Lenny was selected as OverTime Magazine's 2006-2007 "Entrepreneur of the Year."