We are buying 25 shares of Johnson & Johnson (JNJ) at roughly $169.45. Following the trade, the portfolio will own 275 shares of JNJ — increasing its weighting in the portfolio to 1.76% from 1.60%. We are making one more small buy today as we still think the market’s extreme oversold condition — which we highlighted in our first trades of the day and today’s Morning Meeting — and the massive amount of negativity that is out there justifies slowly putting money to work in very small increments at these prices. But as we talked endlessly over the past few months, our buying focus remains in high-quality, dividend-paying stocks that are industry leaders; ones with little economic sensitivity and pristine balance sheets that will weather any type of storm that comes its way. That’s why we like Johnson & Johnson so much. Each of its three businesses — pharmaceuticals, medical devices, and consumer products — have little to no economic sensitivity. What also has us interested in J & J is its upcoming breakup. The company announced last November its plan to separate the consumer unit from the pharmaceutical and medical device businesses. We believe this breakup makes a lot of strategic sense as the two independent, market-leading companies will become more focused. Management will be able to move faster and more effectively allocate capital as they navigate different industry trends to meet the needs of their customers and patients. Lastly, we want to provide our view on the energy sector, which is going through another tough day of declines after outperforming the market all year. While it is difficult to see some of the big unrealized gains we had in our energy positions wash away this week, we are mindful of the important role energy plays in any diversified portfolio. All year energy stocks have been our hedge to inflation, and up until this week, it has been an excellent hedge. If energy prices continue to slide and the stocks follow along with the price of the commodities, we believe this would be positive for the rest of our portfolio because energy is a major inflationary force that is eating away at the margins of companies and the wallets of consumers. Also, we do not see any material risk to their large fixed-plus-variable dividend payments because these companies are still printing money even at $100 West Texas Intermediate. And in the event oil prices stabilize from here or potentially push higher due to how tight supply is, well then that would be positive for the group. (Jim Cramer’s Charitable Trust is long JNJ. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
