We looked at JNJ today. The stock is selling for $91 and we have been long since 2009 at $55.37. Based on historical parameters over the last five years, the stock is on the very high end of its range which we project to be between $64 and the current price. Looking out to 2017 and assuming a p/e of 16 we are projecting a terminal value of $108. Those numbers are in line with Value Line, they are projecting a price between $90 and $110 between 2016 and 2018. Morningstar has a fair value on JNJ of $90, about where it is today. We would not add or enter a new position here until there was a significant pullback.

We are also long RIG at prices in the low 50s and mid to high 40s. The price is a couple of points off of a recent bottom in the $45 area. The stocks sells at 11x 2013 projected earnings and yields 4.9%. We continue to like RIG.

(Long – JNJ and RIG)

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