When legendary blues man Dr. John released Right Place, Wrong Time in 1973 he struck musical gold. To this day, his famous riff “I was in the right place, but it must been the wrong time,” still rings familiar in the ears of afficionados.
Investing veteran Hugh Johnson is currently deploying a related riff when it comes to deploying his money. In the face of great uncertainty, Johnson says he is taking extra care to make sure he’s in the right sector at the right time.
“The first thing is you’ve got to get the right sector,” Johnson says in the attached video. “If the economy expands as much as most of us are forecasting, you want something that is economically sensitive.”
One such pick on his radar right now is the Milwaukee-based maker of auto parts and interior systems Johnson Controls (JCI).
The stock’s sixty percent, 12-month rampage to record highs has also earned it Johnson’s blessing for delivering a positive relative performance. Add in a management change and a strategic shift to higher margin products and Johnson says “JCI fits all of the criteria that I think are important in the current market environment.”
Another outperfoming sector leader that Johnson likes is Mylan Labs (MYL), a drug maker that is trading at an all-time high after rising 65% in the past 12 months. The stock is currently buy-rated by 80% of the analysts who follow it, although Johnson concedes that he gets worried about it being “overwhelmingly liked.”
“The healthcare sector (XLV) has quite frankly surprised me,” he says, noting that investors should be strategic in their buying and hold off "until it pulls back a bit,” adding that it’s well positioned to benefit if Obamacare is successful.
“I know GE is a big company. I know that its revenue results are going to be pretty synonymous with the global economy,” Johnson says, but feels the macro story may not be as bad as many people predict it will.
“The street is low on General Electric. They’re not looking at what (CEO Jeff Immelt) is doing,” he says before pointing to investment in high growth, high margin businesses while divesting from the opposite, all while reducing GE’s reliance on financials.
“Immelt is doing all of the right things,” Johnson says of his industrial pick.
And finally, Johnson shares a little love for the tech sector in the form of Checkpoint Software (CHKP) a $12 billion web security business based in Tel Aviv, Israel.
“Security is such a big issue,” Johnson says. “Just look at Target (TGT)” which is reeling from data breach that hit up to 70 million of the retailer’s customers.
Currently about 20 out of 30 analysts with an opinion on Checkpoint rate it a buy, although their median price target is $67, or only about 3% above the current price.
Nonetheless, Johnson sees way more upside from this company which he says has lots of cash, no debt and is in a position to do lots of things.
“They’re in the right business and they’re expanding,” he says.
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