Mead Johnson

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Mead Johnson ( MJN) has seen some ups and downs in the last few months, but that hasn't stopped the pediatric nutrition firm from generating gains of more than 15% this year. Coupled with a 15.38% dividend increase announced last Friday, MJN is well positioned to continue outperforming the broad market in 2012.

Towards the end of 2011, there was some concern that the firm's Enfamil formula could have been tainted with Cronobacter bacteria, leading to the death of one child and the hospitalization of others. But the FDA and CDC effectively cleared the firm after not finding any traces of the bacteria in their testing. Although that risk knocked shares significantly lower to start the year, MJN has made up lost ground and then some in the last couple of months.

Customer stickiness, government subsidies, and international growth are three key reasons why Mead Johnson looks attractive right now. With each of those tailwinds working to propel shares, the firm's performance thus far could certainly have further to run.

While a 1.51% yield hardly makes MJN a core income holding, the payout is a nice added for investors who were willing to buy shares on other merits.

Mead Johnson is one of the top holdings at Daniel Loeb's Third Point, and it also shows up in Renaissance Technologies' portfolio as of the most recently reported quarter.

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