Welcome back to Close Calls for the week of September 2 through September 5, 2014. They give you the trend, I give you the forecast. This is why I'm hot.
It was just a four-day week on the market, but it seems like a disproportionately large amount of nothing happened in that time. The S&P 500 opened the week at 2005, then coasted, bounced and drifted to close the week at 2007. Say, 2007 wasn't that long ago – I'm sure I can work in at least one 2007 song title this week.
Economic numbers, especially employment numbers, were not all that good. Little by little, but with mounting certainty, we are learning the true name of monster that preys on our economy, and that monster's name is wage stagnation. Wage stagnation is today what inflation was in the 1970's – a force that silently robs us of every perceived gain, growing ever stronger and more ravenous. Inflation continued to be a problem until we learned that fighting it was our highest priority, and the same may turn out to be true of wage stagnation.
Only two stocks have ever earned from me the title of Best Stock on the Market: CVS Health (CVS), and Johnson & Johnson (JNJ). Most recently, it was Johnson & Johnson, but I now believe JNJ could be in for slower growth over the next few months and years. CVS, on the other hand, looks as or more promising that it ever has. As the new name, CVS Health, suggests, CVS is determined to be a true health company. The company's revenue from pharmacy benefit management alone is expected to rise by $3 billion in 2014. Profit margins are rising from the company's in-store health clinics.
The chain has now completely stopped selling tobacco products, months ahead of its own schedule. That looks to me like the actions of a company that knows its winning. When a company is strong enough that doing the wrong thing for a quick buck no longer holds any attraction, true miracles become possible, and that's what I'm expecting from this company.
Here's what I had to say this week.
Julian Close has been a business writer since the first day of the twenty-first century, having written for PRA International and the United Nations Department of Peacekeeping. He graduated from Davidson College in 1993 and received a Master of Arts in Teaching from Mary Baldwin College in 2011. He became a stockbroker in 1993, but now works for Fresh Brewed Media and uses his powers only for good. You can see closing trades for all Julian's long and short positions and track his long term performance via twitter: @JulianClose_MIC.