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 ( JNJ). 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.