In yesterday’s post, I talked about having to make a decision as to which stock(s) I will actively invest in on a weekly basis for 2007. Since the federal Government was closed today in observance of President Ford’s Funeral, I spent a little time researching and have arrived at a decision. As alluded to yesterday, I have accumulated a decent quantity of Microsoft stock through weekly investments over the past 12 months and plan to HOLD these stocks through 2007. Hopefully, Microsoft’s new OS (Vista) will add to the recent gains that their stock has enjoyed. I have chosen two stocks to replace Microsoft for my weekly investments that I didn’t mention in yesterday’s post. I was led to these two stocks by analyses of various companies and the marketplace. My research also used a multi-installment article written by columnist and Mad Money author Jim Cramer on The Street.Com that discussed his take on the prospects for stocks that make up the Dow.
The first of the two stocks is HP (HPQ). The belief is that HP knows how to make good quality computers at a great price, and that sales will be positively impacted by the release of Microsoft Vista. HP recently took the number one ranking away from rival DELL in worldwide personal computer shipments. It also quadrupled its earnings and generated a strong cash flow built on strong sales, improved margins, and effective restructuring. On the downside, there is intense competition in the desktop, laptop and printer market. Also, a boardroom spying scandal has generated SEC and FCC inquires and an amended shareholder lawsuit claiming insider trading. The stock is currently trading at ~$41 with a target of ~$52.
The second of the two stocks is Johnson & Johnson (JNJ). There is a very positive outlook for Johnson & Johnson is based on healthy financial performance during the recent quarter, as well as its diversified business model. They also recently acquired a portion of Pfizer which is projected to significantly boost earnings in the near future. The stock is currently trading at ~$66 with a target near $80.
I plan to start accumulating these two stocks starting next week using my automatic investment tool on Sharebuilder.com. I will invest an equal weekly amount in each of these two stocks.