Sand Spring Advisors LLC
March 1, 2002
by, Barclay T. Leib
Johnson & Johnson is about as solid a company as one can find out there: steady historical revenues growth and a relatively low level of debt on the balance sheet. It is the type of stock my mother has had in her portfolio forever, and I can find little on the surface to argue selling.
JNJ does of course currently sport a relatively frothy P/E ratio of 33-1. And surely, the drug and consumer-oriented stocks will not be the safe-haven recipient of capital looking for a Blue-Chip home forever. But where to sell?
The chart above suggests that on a Fibonacci rhythm basis, JNJ has a bit more to run - perhaps to about $63.90 or thereabouts -- but not much beyond. We have little fundamental cause to sell this stock, so caution should be exercised not to establish any aggressive shorts. But for those long JNJ forever, maybe it will be time to "collar" this position soon. A Dow toward 10,523 with JNJ at or about $63.90 at the same time would cretainly be enough for us to move into action to somehow lock in long-term gains.
JNJ may be a stock many have "fallen in love with" over the years. But don't let such an affection cost one when the time arrives to take advantage of its current vogue -- and sell.
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