February has been a quiet month on the investing side of things. I have been reading, checking earnings reports and staying abreast of the news for the various companies I have a stake in. I haven’t really seen much that has been troubling to me. The stronger dollar continues to hit some of the companies with more international exposure and be a boon to some that don’t.
I am not really a social media person, but I decided to create a Twitter account and see how that works out.
I have been adding to companies that I own for the last few months. I have been doing this because I am the most familiar with those companies and value in the market has become a little bit stretched. I have identified a few companies I would like to start a position in, but need to first determine what I think fair value is and go from there. Before the end of the month, I plan on making a post about one of those companies and provide insight into how I make buy/don’t buy decisions.
However, I have added to Johnson and Johnson (12 shares@100). I have wanted to add to JNJ for some time, as my last non-drip purchase was 12/20/2012. The price has come down somewhat and I felt that it was as good a time as any to add to it. The price is basically around fair value in my opinion, which is about as good as it gets right now (aside from the oil market, which I have a large allocation to right now).
It’s not necessarily JNJ, but the type of stock that it is. Right now, with the markets at all time highs, I am doing my best to make purchases that are “safe”. By “safe”, I mean investments that are less likely to loose all the money that is invested. Companies like JNJ (PG, XOM too) that have paid dividends for a long time, have wide moats and provide services that can be described as necessities in all business climates (expansion/recessions).
Currently, JNJ pays out 2.80 in dividends per year. In the last 10 years, JNJ has had more Free Cash Flow(FCF) than their current dividend (lowest was 2005 with $3.07 per share). Currently, they are on pace to have even more FCF this year then last. They have well managed debt with Debt/Equity ratio of .17 and an Interest Coverage Ratio of 40! Debt is something that is easy to have a lot of when times are good, but then can be a millstone during harder times. Revenue has been growing fairly steadily over the last decade and should not disappoint at the end of the fiscal year.
These are just a few numbers, but looking over the earnings reports and additional financials solidifies my rational for adding to this position at this time. I don’t expect to be surprised by anything with JNJ over the next year, so it’s as good a time as any to add.
Depending on how things go, I may add to this position next month during my next purchase.
Happy Presidents Day!
I hope everyone has a safe and happy holiday. Hopefully you have the day off and the sun will be shining!
Disclaimer: Long, JNJ, PG, XOM