The trend is your friend. So when you see a string of earnings reports that tell you a certain story about a company, it’s really a bad idea to ignore it. As my old math teacher once told me, “If the book says there’s a monster at the end of this book, there’s going to be a monster at the end of this book.”

The monster at the end of Johnson & Johnson‘s (NYSE:JNJ) book is that it is a moribund company that isn’t growing and hasn’t been for some time. JNJ’s sales increased 5.6% YOY, and net income increased 5%. It took three years for Johnson & Johnson to exceed its 2008 sales figures. The company believes FY 2012 net income will only rise 1% to 3% on a 3% to 5% sales increase.

Now, don’t get me wrong — Johnson & Johnson is a fine company. It makes zillions of great products and drugs, it produces free cash flow in the $15 billion range annually and it yields a 3.5% dividend. But JNJ is one stock in a market of many thousands of investments. There are so many other choices available that offer better risk-adjusted returns. In January 2002, JNJ stock was at the same price at it is today. If you’ve parked your money in JNJ, all you’ve done is collected a taxable dividend.

Now I understand that some people are looking for really secure investments that aren’t going to experience a lot of volatility, and maybe collect a little dividend along the way. Well, AT&T (NYSE:T) also has gone nowhere since 2002, and its dividend is at 6%. That’s just one option. Preferred stocks offer much better risk-adjusted returns, with a diversified ETF basket of them — the iShares S&P U.S. Preferred Stock Index Fund (NYSE:PFF) — yielding 7%.

There’s just no reason to hold JNJ, so I say sell it. Do not, however, short it. You only should short stocks that have a fundamental flaw in their business model or clearly are going to go bankrupt.

Along these lines, we all deserve a break today, but I suggest you only take that break by eating at a McDonald’s (NYSE:MCD) rather than buy the stock.

In this case, we actually have a stellar company that is growing, and growing very nicely, at a 10% annualized clip. McDonald’s benefited a lot from the tighter purse strings of most consumers over the past few years. And once again, it produces some $4 billion annually in free cash flow and pays a 2.8% dividend.

The trouble with Ronald McDonald’s House of Finance is that the stock is vastly overpriced. Back in October, I wrote about McDonald’s with the controversial suggestion to sell it, because I felt a $100 stock price was all the company deserved — in 2015. At the time, the stock was at $90. Now it’s at $99.

OK, so you missed out on that 10% gain. But at this point, I wouldn’t expect much more for some time. I’d fill up on some other menu selection, because McDonald’s is trading at a P/E of 17, which gives it a PEG ratio of 1.7. In my estimation, you can assign a 13 P/E to a premium company like this. At $5.72 in 2012 earnings, that means I see fair value at around $75.

As of this writing, Lawrence Meyers did not hold a position in any of the aforementioned securities. He is president of PDL Capital, Inc., which brokers secure high-yield investments to the general public and private equity. You can read his stock market commentary at SeekingAlpha.com. He also has written two books and blogs about public policy, journalistic integrity, popular culture and world affairs.