I follow quite a lot of companies, so the usefulness of a watchlist to me cannot be overstated. Without my watchlist, I'd be unable to keep up on my favorite sectors and what's really moving the market. Even worse, without my watchlist, I'd be lost when it came time to choose what stock I'm buying or shorting next.
Today is "Watchlist Wednesday," so I'm discussing three companies that have crossed my radar in the past week and at what point I may consider taking action on these calls with my own money. Keep in mind, these aren't concrete buy or sell recommendations, nor do I guarantee I'll take action on the companies being discussed weekly. What I can promise is that you can follow my real-life transactions through my profile, and that I, like everyone else here at The Motley Fool, will continue to hold the integrity of our disclosure policy in the highest regard.
Johnson & Johnson (NYS: JNJ)
To me, the Johnson & Johnson brand name is synonymous with stability. With the stock trading smack-dab in the middle of its 52-week range, now is the time to begin seriously thinking about taking a position as we head into what in recent years have been the volatile spring and summer months.
Johnson & Johnson yesterday reported first-quarter results that more or less disappointed Wall Street. I, however, am taking this disappointment as even more reason to be bullish. The primary concern surrounding J&J is the length of time it's taking to get some of its non-prescription drugs, including some Tylenol and Motrin products, back on the shelves after a recall was enacted concerning the drugs' manufacturing quality. Based on its report, it appears that won't happen now until 2013.
But J&J made some smart decisions in the quarter, including the sale of high-blood-pressure drug Bystolic to the struggling Forest Labs (NYS: FRX) for $357 million. J&J's lower research and development costs and broad product line should help it easily weather any manufacturing snafus. I feel it represents a solid dividend income and value play right here.
AuRico Gold (NYS: AUQ)
I almost feel like I could go through on a week-by-week basis and pick out a new gold or silver miner that is being brutally undervalued by investors. This week AuRico Gold has my attention, after the company supplied a three-year production forecast over the weekend. Here's a quick roundup of AuRico's forecast:
Cash Cost Per Equivalent Gold Oz.
Capital Expenditures (in millions)
Source: AuRico Gold press release.
You'll notice the key metrics here are that gold production is expected to rise every year, cash costs per equivalent ounce are going to rise by a lot less than production volume, and capital expenditures on mine drilling and maintenance are falling because AuRico's mines are mature now. This is a recipe for earnings growth if I've ever seen it. At just eight times 2013's fiscal EPS estimates, AuRico looks like a steal at these levels.
Berkshire Hathaway (NYS: BRK.A) (NYS: BRK.B)
When news surfaced shortly after the closing bell yesterday that Warren Buffett has been diagnosed with stage 1 prostate cancer, it was not surprising to see Berkshire's stock begin to tumble. The Oracle of Omaha has been instrumental in turning Berkshire into the massive holding conglomerate that it is today. However, if I've learned anything from Buffett over the years, it's that no man is greater than his business.
Buffett has worked so tirelessly over the years to ensure that Berkshire would be in fantastic shape even without him. Outside of one-time derivative revaluations, Berkshire's many subsidiaries, which range from insurance to jewelry stores, performed well in the recently ended quarter. Berkshire's prudent fiscal management throughout the decades is what makes the company such a pillar of stability. It's for that reason you should give Berkshire's stock another look if it continues to drop on what I'll call "Warren worry."
On a personal level, though, I wish Mr. Buffett a speedy recovery.
Is my bullishness or bearishness misplaced? Share your thoughts in the comments section below, and consider following my cue by using the links below to add these three companies to your free personalized watchlist to keep up on the latest news with each company.
Add Johnson & Johnson to My Watchlist.
Add AuRico Gold to My Watchlist.
Add Berkshire Hathaway to My Watchlist.
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At the time thisarticle was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He's a total nerd when it comes to making lists. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of Johnson & Johnson and Berkshire Hathaway. Motley Fool newsletter services have recommended buying shares of Johnson & Johnson and Berkshire Hathaway, as well as creating a diagonal call position in Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that believes transparency comes first.
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