Top Wealth-Creating Stocks Defying Stock Market Sell-Off?

What Stocks Are Defying the Near-Term Stock Market TrendWith the broader stock market selling off, it’s amazing to see a company’s share price defy the near-term trend and appreciate in value.

Time and time again, Johnson & Johnson (JNJ) gets bid when the broader market faces convulsion. It’s a powerful signal, and there is still a great deal of angst among institutional investors; they still want those dividends and the relative safety of earnings that are predictable.

Johnson & Johnson has been—and continues to be—an excellent wealth creator. The stock’s been bouncing off $95.00 a share the last while and just recently, it seems to have broken past this price ceiling.

There’s not a lot new with this position. One Wall Street firm recently boosted its earnings expectations for the company in 2015. Sales growth is expected to be in the low single-digits this year, but annual earnings growth combined with dividends should be in the low double-digits once again. The company reports its first-quarter numbers on April 15.


There’s definitely been a change in investor sentiment regarding speculative positions. Biotechnology stocks, which have been the market’s multiyear winning sector have finally seen investors book profits. It’s been long overdue and from a market perspective, is a healthy development for the primary trend.

The selling migrated to large-cap technology names and the shakedown just might last a while longer. Anything can happen during an earnings season, but a “sell in May and go away” type of scenario is a real possibility again this year.

Other blue chip names that are also defying the market’s recent action include 3M Company (MMM), Union Pacific Corporation (UNP), Kimberly-Clark Corporation (KMB), Microsoft Corporation (MSFT), Caterpillar Inc. (CAT), United Technologies Corporation (UTX), and The Walt Disney Company (DIS).

Even though the Dow Jones Industrial Average pulled back with the NASDAQ Composite, many component companies are either pushing or trading right near their highs. This price resilience among the big names is important and makes me worry less about a change in the market’s primary trend.

Johnson & Johnson boasts a forward price-to-earnings ratio of 15, according to Morningstar. The company’s been increasing its earnings per share consistently the last few years, along with its annual dividends.

In 2009, the company paid out $1.93 per share. This grew to $2.25 by 2011 and to $2.59 in 2013.

Even though this stock has gone up tremendously the last few years, it can keep doing so if it meets or beats consensus, because institutional investors want the company’s earnings reliability. Portfolio safety and risk are two very important attributes and recent market action illustrates how essential it is not to let investment risk and portfolio management go by the wayside.

Johnson & Johnson has proven itself to be a dividend-paying stock that’s worth considering when it’s down. According to history, it’s not typically a company that’s down in price for long. (See “This Blue Chip Keeps Bouncing Back.”)

Stocks that outperform the broader market over the long haul make for great bedrock positions in an equity portfolio. Johnson & Johnson’s been doing this for years.