What's Non-discretionary?

In these uncertain times, we're all looking to hunker down and find companies that only produce the essentials. This investment theme led us to buy XLP earlier this year and relative to the markets, it has performed well. (we don't own this anymore).

I'm working today at a cosmetic surgery clinic, and none of the plastic surgeons here were aware that Johnson and Johnson's company has bought Mentor, one of the largest maker of cosmetic implants in the world! Do I need to be more clear? Breast implants are a big industry and still growing! Although not recession proof, cosmetic surgery worldwide is growing in double digits.

:)
Now JNJ's acquisition of Mentor is small potatoes for a giant like JNJ with revenues of $60 billion, and market cap of $157 billion. This got me thinking again about non-discretionary companies and there is no better than JNJ. They have a pharmaceutical divison, consumer products, and medical devices. Similar to 3M, they have thousands of products, including Band-Aid, Splend, Neutrogenia,Tylenol.

Dividend yield of 3% is fifty percent higher than its 5 year average of 2%. Its down 15% on the year and sports a low eta of 0.51.

They sport a good balance sheet and are showing shrewd management now acquiring Mentor at a low point in the cycle.

Its also a large multinational, so if the $US ends its recent rally, it is somewhat cushioned, literally :)