Although I like JNJ a lot, I am nervous about the entire market despite this morning’s action and I think JNJ will open up $1 and will have trouble making it over the 50 dma of $61.30. If it breaks that level on volume, I will like the trade but that’s too many ifs for a Trade of the Day!
The play on NGRU, on the other hand is based on the company’s intention to distribute the sale of its REI division to shareholders of record as of 1/17.
The company is very small but has some value and your $1.1 purchase of stock will net you a refund of .85 on 1/27. I don’t believe that the stock will drop all the way down to .35 after the distribution but, if you are worried about it, you can sell on the 18th and you will still get your check for .85!
The company has $15M in sales, about 1/2 of which were REI related but will have no debt going forward and plenty of cash for operations which they are looking to sell off or wind into another company.
Should the company go up to $1.25, I will take the 15% and run, prior to distribution but I think selling right on the 18th may be the best way to go. Should the stock drop below .40 after the distribution, I would say it will pay to be patient and we will get our .50 eventually.
