Wjhonson's Stock Pick Details

as of 13 Sep 2009

Every so-often I post my stock market picks in condensed form. In this article I will outline the main criteria I use to pick stocks, and how my picks measure up.


You can follow my stock picks in condensed form at this link.

This article written and copyright 2009 by Will Johnson, wjhonson@aol.com
All Rights Reserved


The below table has fourteen columns.  The stock symbol, followed by the company name are the first two.  The third column is the yahoo.finance analyst opinion (2.8 in this case) over the number of analysts surveyed (14).  The next column is the Morningstar star rating, out of a possible five stars.  The next column is the high and low stock price for this stock over the past year.  The next column is the yahoo.finance stock price one-year target for this stock.  The next column is the Morningstar "buy this stock at" price.  The next column is the Morningstar "Fair value price" for this stock (that is, what they think it's actually worth today).  The next column is the Morningstar "Sell this stock at" price.  The next column is the yield, followed by the date on which you must be holding the stock to get that yield (which is not the same as the date on which it's actually paid). The next column is today's price. The next column is the MSN Money Stock Scouter Rating out of a possible 10.  The final column is the Motley Fool Caps Rating, out of a possible five stars. The below table is just an example, the data is not real.

Note, on the Motley Fool Caps Rating, I link to the summary page at MSN because the actual Motley Fool site is so incredibly slow that they should fire their internet provider.  I mean slow as in deathly slow.

Symbol Name YF Rating MS Rating 1Yr Range 1Yr Target Buy At Fair Price Sell At Yield Exdiv Price MSN-SS RatingMF Caps
 MRK  Merck  2.8/14  ***  25.50-36.26  32.50  21.00  33.00  39.80  4.70%  11-05  28.50   

Let's analyze this entry.  The yield is pretty fair for a large company.  Typically I like any yield above about 2.5%.  The yield however is not the main thing I look at, it's just gravy.  The meat is the growth in the stock price.  Currently this stock is selling at 28.50, in a 1 year range of 25.50 - 36.26, so it's fairly low compared to where it's been.  Morningstar thinks it's current fair price should be 33 which is a fairly nice current-markup.  Yahoo thinks the 1 year target is 32.50, again a fairly nice long-term-markup.  If you were to buy today and these expectations were fulfilled, you should reap a 14% to 20% profit over a year and possibly right away, including the yield.

The downside of this entry is the analysts surveyed by Yahoo finance only give the stock a 2.8 in a rating range of 1.0 to 5.0, and Morningstar only gives it 3-stars out of a possible 5-stars.  That's not too good.  So even though they think you can make money off holding the stock either short or long-term, they don't particularly like the stock for some reason.  This is a mixed message, and you would be welcome to now delve into the details more thoroughly to find out why.  This may however be the best of the bunch in its section, and in that case, provided you like that sector (pharma) it's still an excellent buy in my opinion. Now would be the time to compare it to its competitors like Pfizer, Abbott, Novartis, etc.

Current Stock Picks Analyzed

My current stock picks, for today (13 Sep 2009), based just on a small set of criteria (which I state at my condensed link) are: Abbott Laboratories, Eli Lilly & Company, Johnson & Johnson, Merck & Co, Novartis AG, Pfizer, Proctor & Gamble, Weight Watchers.  Let's analyze them and see whether we can narrow that to one or two.

 Symbol  Name YF Rating MS Rating YF 1Yr Range YF1Yr Target Buy At Fair Price Sell At Yield Exdiv  Price MSN-SS Rating
MF Caps
 ABT Abbott  1.9/11 ***** 41.27-59.75 53.00 54.40 68.00 85.00 3.4% 13-Jul 46.83

 LLY Eli Lilly
      35.73           32.82   
 JNJ Johnson & Johnson
 2.2/12  ***** 0.00 - 72.69
80.00 100.00
3.2%   60.42   
 MRK Merck       34.20           32.54   
 NVS Novartis     33.34 - 52.83 49.65 58.40 73.00 91.30 3.4%   47.60  8/10 *****
 PFE Pfizer  1.9/12  ***** 11.62 - 19.39
19.03 18.20 26.00 36.40 3.9%   16.25   
 PG Proctor & Gamble
      60.20           55.64   
 WTW Weight Watchers
      27.80           26.00   

For comparison, I list a few of my perennial favorite stock picks below
 Symbol  Name YF Rating MS Rating  1Yr Range  1Yr Target Buy At Fair Price Sell At  Yield  Exdiv  Price
 BAC Bank of America
2.3/19  *** 0.00-39.50 18.13 6.40 16.00 40.00 0.20%   16.97
 XOMExxon Mobil
2.5/14 *****56.51 - 83.6476.58 69.60 87.00 108.802.4%11 Aug68.70
 YUM Yum Brands
 **** 0.00 - 40.25 37.92 32.20 46.00 64.40 2.3% 15 Jul 33.40

You don't know "Yum" but you know their products: Taco Bell, Kentucky Fried Chicken and Pizza Hut.  The go-tos places for people scrimping on dine-out.  They should do well in any recession.

Look at that whopping uncertainty in the price of Bank of America.  From a buy at 6 to a sell at 40 is an incredible factor of over 600 percent.  This reflects the who-knows attitude of what's going to happen with banks in general.  Compare that to Abbott above, reflecting a maximum swing in its price of only 60%, ten times less.

Of those picked, the ones which should just jump right out and smack you in the face are Abbott and Pfizer.  So buy them.  Delay means money lost.  After buying them, check daily or weekly (as you prefer) the stock price compared to the Fair Value price.  Once it's hit fair value, sell it, in fact if you've made a nice rise, sell it even before it hits.  I like bargains, I don't like buying at full price personally.  Once there's a sucker willing to pay full price, I say sell it to them.