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Johnson & Johnson's Outlook Nothing to Worry About


It had a solid fourth-quarter and has plenty of room to keep growing.

Asian stocks took yet another hit overnight. The Hang Seng and the Nikkei were off 0.38% and 0.71%, respectively. European stocks were in the red early this morning, too. And here in the US, we're currently trading lower.

Here's what I'm seeing this morning:

Johnson & Johnson (JNJ):
The New Jersey-based company was out with its fourth-quarter numbers yesterday.

Excluding items, it put $1.02 on the scoreboard. That's eye-catching because it's a nickel north of expectations. J&J managed to beat the Street on the top line, too. But unfortunately, the shares got a little slap on the wrist in yesterday's session: It seems some folks have their underwear in a bunch because the company offered up an outlook of $4.85 to $4.95 for 2010 when the Street is at $4.94.

Some thoughts:

1. It was a solid quarter and it deserves props for that. And as far as 2010 is concerned, the company could be sandbagging a bit. It's whooped estimates consistently this past year, and there could be upside to its view.

2. The shares could (and should) trade north of $70. In the next year or so I think they'll be there, and the hand-wringers will be wondering why they didn't hop on board in the low $60s when they had the chance.

3. But beyond this short-term chatter, how can anyone not like this company? With big names in its medicine chest, it has plenty of opportunity to grow and take in dough here and outside the US in the years to come.

For my last take on J&J, click here.

Yahoo (YHOO):
The company I've come to affectionately refer to as "Bartz's baby" was out with its fourth-quarter numbers.

Its non-GAAP number in the period was $0.15, and that caught my eye because the Street was at $0.11. But this line from the release made my ears perk up a bit more: "Revenue for the first quarter of 2010 is expected to be in the range of $1,575 million to $1,675 million." That's good news because the Street is at $1.16 billion.

Some other thoughts:

I continue to believe Yahoo's stock is a much better bet than Google's (GOOG).

I'm also hoping that the display-ad environment will continue to perk up because that could draw a lot of attention to it as well.

3. In sum, it was a good quarter. Not stellar, but good. I think analysts will be paying attention to the improving environment, and the shares deserve to trade higher on the news.

For my last take on Yahoo, click here.

Verizon (VZ):
Justin Sharon points out in his article this morning that FBR Capital downgraded it to Market Perform.

My two cents:

1. I think the shares are a decent value here. While I don't think the downgrade will sit all that well with the investment community, the fact is that the company is expected to put up $2.41 a share this year, which isn't too shabby with the stock trading at just north of $30.

2. Note that the data shows that an officer bellied up at $29 and change late last year. This gives me some confidence that there could still be some upside from current levels. Bottom line, I see the recent pullback from the highs as more of an opportunity.

US Steel
(X) :
Citi downgraded it to Hold.

I think the stock is ahead of itself and I agree with the move. Don't get me wrong, I feel there's ample opportunity for the company to generate strong profits in the years ahead. But the $1.48 that's expected for this year just doesn't scratch me where I itch. I think the stock comes lower from here.

Have a great day -- only two more days until the weekend!
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No positions in stocks mentioned.

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