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Johnson and Johnson Posts 9% Increase on Second Quarter Profits

Johnson & Johnson’s (JNJ) acquisition of Pfizer and large increases in overseas sales contributed to a 9 percent increase in its second quarter profits announced early Tuesday. The company’s overall revenue saw an encouraging 13 percent rise.

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Johnson and Johnson, a company based in New Brunswick, N.J., posted a net income of around $3 billion. This is up from up from a little over $2.8 billion a year ago.

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Analysts were expecting earnings of $1 per share and earnings came in at $1.05 per share. In sales, the company tallied over $15 billion, up from nearly $13.5 billion a year earlier. Analysts were lower by about $60 million on their sales estimates.

William Weldon, Johnson and Johnson CEO, said in a statement, “We continue to grow earnings while successfully integrating acquisitions and continuing to invest in promising new growth opportunities.”

The company announced last week it would be conducting the largest stock buyback in company history. JNJ plans to buy back $10 billion of stock, but has not specified the time period for the buyback. This company could have easily been included in our “5 stocks with Heavy Insider Purchasing” article posted earlier this week.

This is great news for a company who saw an 8 percent decrease in first quarter earnings.

Analysts tout this company because over half of its sales come from overseas. Jim Cramer calls this a ROW or ‘Rest Of World’ stock. We reported on Cramer’s method in our May 23rd entry entitled, “Jim Cramer’s Advice: Invest in Rest of World”.

Medical devices were chief among the products causing higher sales numbers for Johnson and Johnson in the second quarter. These products include: disposable contact lenses, glucose monitoring devices and surgical and wound-care products. Because of news and studies questioning the efficacy of arterial stents, the company saw declines in sales of its Cypher stent.

Option Ideas:
Today, we will take a look at covered call option trades for Johnson and Johnson and three of its main competitors: Proctor and Gamble (PG), Novartis (NVS), and Merck (MRK).

Looking at this News from an Options Trading Perspective:
Finding the right option trade can be difficult for investors if they don’t have a solid search tool to help them identify trades. Option data and information is often cumbersome and difficult to find. An option investor requires the aid of a reliable tool to help them with the difficult task of identifying solid option trades.

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Potential Trades:
All of the following option trades have 96 days until expiration. These trades were discovered using the powerful suite of option search tools found at PowerOptions.

Covered Call Search
Symbol Stock
Merck & Co. Inc. MRK 50.83 (-0.02) MRKJX 07 OCT 52.5 (96) 1.65 3.2 3.4 6.8
Procter & Gamble Co. PG 63.15 (+0.49) PGJM 07 OCT 65.0 (96) 1.35 2.1 2.2 5.2
Johnson & Johnson JNJ 63.80 (+0.37) JNJJM 07 OCT 65.0 (96) 1.6 2.5 2.6 4.5
Merck & Co. Inc. MRK 50.83 (-0.02) MRKJJ 07 OCT 50.0 (96) 2.9 5.7 4.3 4.3
Novartis AG NVS 55.45 (+0.51) NVSJK 07 OCT 55.0 (96) 2.6 4.7 4.1 4.1
(For more details click the ticker symbol above)

The trades shown above offer between 4.1 and 6.8 percent potential profit and between 2.1 and 5.7 percent downside protection. All of the option trades listed above are October calls and have 96 days until expiration.

Competitors for MRK include: Bristol-Myers Squibb Co. (BMY), Pfizer Inc. (PFE), Sanofi-Aventis (SNY), Abbott Labs (ABT), AstraZeneca plc (AZN), Cardiome Pharma Corp. (CRME), CV Theraputics Inc. (CVTX), Dynavax Technologies Corp. (DVAX), GTx Inc. (GTXI), Hythiam Inc. (HYTM), Johnson & Johnson (JNJ), Keryx Biopharmaceuticals Inc. (KERX), Kos Pharmaceuticals Inc (KOSP), NPS Pharma. Inc. (NPSP), Novartis AG (NVS), Sangamo Biosciences Inc. (SGMO), Trimeris Inc. (TRMS), and Watson Pharma. Inc. (WPI).
Competitors for PG include: Johnson & Johnson (JNJ), Kimberly-Clark Corp. (KMB), Unilever (private), Alberto-Culver Co. Inc. (ACV), Adams Respiratory Therapeutics Inc. (ARXT), Columbia Laboratories Inc. (CBRX), Church & Dwight Co. Inc. (CHD), Chattem Inc. (CHTT), Colgate-Palmolive Co. (CL), Clorox Co. (CLX), Estee Lauder Co. Inc. Class A (EL), Playtex Products Inc. (PYX), Salix Pharma. Inc. (SLXP), and Unilever NV (UN).
Competitors for JNJ include: Merck & Co. Inc. (MRK), Novartis AG (NVS), Procter & Gamble Co. (PG), Allergan Inc. (AGN), Amgen Inc. (AMGN), American Med. Sys. Hlds. Inc. (AMMD), Angiotech Pharma. Inc. (ANPI), ARIAD Pharmaceuticals Inc. (ARIA), Adams Respiratory Therapeutics Inc. (ARXT), Advancis Pharma. Corp. (AVNC), Bayer AG (BAY), Becton Dickinson & Co. (BDX), BioVeris Corp. (BIOV), Bausch & Lomb Inc. (BOL), Boston Scientific Corp. (BSX), Columbia Laboratories Inc. (CBRX), Cephalon Inc. (CEPH), Chattem Inc. (CHTT), Conor Medsystems Inc. (CONR), Conceptus Inc. (CPTS), Dade Behring Hldgs. Inc. (DADE), Genzyme Corp. (GENZ), Hollis-Eden Pharma. (HEPH), Human Genome Sciences Inc. (HGSI), Intuitive Surgical Inc. (ISRG), Lifecell Corp. (LIFC), Medtronic Inc. (MDT), Millennium Pharm. Inc. (MLNM), 3M Co. (MMM), Merit Medical Systems Inc. (MMSI), Prestige Brand Holdings Inc. (PBH), Protein Design Labs Inc. (PDLI), Schering-Plough Corp. (SGP), Santarus Inc. (SNTS), Steris Corp. (STE), Teleflex Inc. (TFX), Tyco International Ltd. (TYC), Warner Chilcott Ltd. (WCRX), and Watson Pharma. Inc. (WPI).
Competitors for NVS include: Johnson & Johnson (JNJ), Merck & Co. Inc. (MRK), Pfizer Inc. (PFE), Alcon Inc. (ACL), AtheroGenics Inc. (AGIX), Alnylam Pharma. Inc. (ALNY), Amgen Inc. (AMGN), Avanir Pharmas. (AVNR), Axcan Pharma Inc. (AXCA), AstraZeneca plc (AZN), Bristol-Myers Squibb Co. (BMY), Cephalon Inc. (CEPH), GlaxoSmithKline PLC (GSK), Shire PLC (SHPGY), Taro Pharma. Indus. Ltd. (TARO), Theravance Inc. (THRX), Valeant Pharmas. Intl. (VRX), and Wyeth (WYE).
For more information about how to identify and research great option trades, visit the PowerOptions website. There you will find the data you need to make quick, clear, and informed decisions. You can trade knowing you have found the best investment. Also, PowerOptions will allow you, with a few quick clicks, to quickly and accurately compare trades. PowerOptions‘ premium customer support is second to none in the industry.

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