Last month was brutal. It was the second-worst January for the Nasdaq ever after the index lost almost 9%.
Now, I don’t believe that as goes January, so goes the rest of the year.
But the numbers don’t look great.
In years where the Nasdaq started with a negative return in January, the average return over the remaining 11 months was less than inspiring at 4.5%.
Rushing to buy the dip may not be the best move right now.
If the dot-com bust of 2000 is any guide, investors are better off allocating to boring, old-economy blue chips until the market downturn has run its course.
A Bullish Blue Chip: Johnson & Johnson
Johnson & Johnson (NYSE: JNJ) is a great candidate.
It was one of three companies producing approved COVID-19 vaccines in the United States. But JNJ’s pharmaceuticals business was a behemoth long before the pandemic came along. It’s also a leader in medical devices and consumer products such as the iconic Band-Aid.
The stock pays a solid 2.5% dividend. It declared a cash dividend of $1.06 for the first quarter of 2022. I know that isn’t even beating inflation right now, but JNJ’s “Bullish” 68 on our Green Zone Ratings model should make up for that.
Johnson & Johnson’s Green Zone Rating on February 1, 2022.
Let’s dig a little deeper.
JNJ’s Green Zone Rating
Volatility — Johnson & Johnson is the definition of a low-drama stock. It rates a 90 on our volatility factor, meaning it’s less volatile than all but 10% of the stocks in our universe.
It’s also worth noting that JNJ is positive in 2022. It sidestepped the worst of the January market correction, and its stock price rebounded in a quick fashion to end the month.
Growth — Despite the lack of drama, this stock is far from boring. It rates an 89 on our growth factor. This is a solid growth stock whose fortunes aren’t tied to the changing winds of social media.
JNJ expects another $10.40 to $10.60 in earnings-per-share growth this year, according to its recent quarterly report. Its new CEO, Joaquin Duato, also mentioned the company is looking for more acquisition opportunities. You can bet that investors will key in on that as they look for alternatives to the tech trade.
Quality — Our quality metric is all about profitability. Johnson & Johnson rates a solid 86 here, reflecting both the profitability of its patented drug and device businesses and its strong consumer branding power…like the iconic Band-Aid or Tylenol.
Momentum — The stock rates an average 53 on our momentum factor. That’s not bad, given that investors have gravitated to go-go tech names in recent years. It would not surprise me to see this factor rating creep higher throughout 2022 as investors rotate into quality names.
Value — Johnson & Johnson isn’t cheap. It rates a 39 on our value factor. That’s OK. It’s rare to find a stock of JNJ’s quality trading at a cheap price. You pay for quality.
Size — This is a large stock with a history dating back to the 1880s. It’s no surprise that it rates a 1 on our size factor.
Bottom line: Johnson & Johnson is a wonderful company to own amid market volatility.
And it has another sweetener coming down the pipeline. The company announced late last year that it‘s spinning off its consumer products division to focus on its higher-margin prescription drugs and medical devices businesses.
All of this makes Johnson & Johnson a solid pick for any dividend portfolio.
Bonus: If you’re looking for stocks we believe will handle whatever this market correction throws our way, give Green Zone Fortunes a look.
Money & Markets chief investment strategist Adam O’Dell has loaded the Green Zone Fortunes model portfolio with some of his highest-conviction stock recommendations. Just last week, he added a tech giant to the portfolio that is up 7% since January 24, 2022.
If you want to see how Adam’s subscribers are weathering the market volatility, click here.
To safe profits,
Charles Sizemore
Co-Editor, Green Zone Fortunes
Charles Sizemore is the co-editor of Green Zone Fortunes and specializes in income and retirement topics. He is also a frequent guest on CNBC, Bloomberg and Fox Business.