Stock (Symbol) |
Johnson & Johnson (JNJ) |
Stock Price |
$104 |
Sector |
| Healthcare |
Data is as of |
| February 24, 2016 |
Expected to Report |
| Apr 12 – Apr 18 |
Company Description |
 Johnson & Johnson is a holding company. The Company is engaged in the research and development, manufacture and sale of a range of products in the health care field. The Company has more than 265 operating companies conducting business around the world. The Company’s primary focus is products related to human health and well-being. The Company is organized into three business segments: Consumer, Pharmaceutical and Medical Devices.Source: Thomson Financial |
Sharek’s Take |
 I truly believe Johnson & Johnson (JNJ) is the safest stock you can invest in. The only issue is you have to settle for an 8% estimated total return, as the est long-term growth rate is 5% and the dividend yield is 3%. J&J has 3 divisions:Pharmaceutical, 45% of sales, serves the immunology, infectious disease, neuroscience and oncology fields. Medical devices, 35% of sales, serves cardiovascular, diabetes, diagnostics, orthopaedic, surgery and vision care. Consumer, 20% of sales, include Tylenol, Motrin, Benadryl, Band-Aid, Listerine, Carefree and Neutrogena. J&J’s credo includes “Business must make a sound profit” and its delivered 32 consecutive years of profit growth. JNJ has a AAA rating from S&P, only JNJ, MSFT & XOM have this. 2015 was the 53rd consecutive year of dividend increases. Around half J&J’s sales are International, and that’s crimping profits. But profits are expected to be 6%, -3%, 9% and 8% the next 4 qtrs so better profits are on the horizon — which may explain why JNJ broke out to an All-Time high yesterday. At 16x earnings, you’re paying for quality in a company you can trust. I am adding JNJ to the Conservative Portfolio. |
One Year Chart |
 This stock was has built a long base and just yesterday broke out to a new high of $106. This breakout is significant, as investors are in search of safe growth. But growth isn’t strong. 5% last qtr as sales declined 2%. I think investors are looking forward to estimates 3 and 4 qtrs out, where 8% and 9% profit growth is expected. |
Fair Value |
 This stock sells for 16x earnings, which doesn’t make it cheap. As you can see in the table to the right JNJ sold for 12 to 14 times earnings after the 2008 market crash. Still, I think stock has legs and can make a solid move higher right now. My Fair Value is 17x earnings, but the P/E could get to 19 or 20. |
Bottom Line |
 Johnson & Johnson a great stock for conservative investors searching for growth in an environment where CDs aren’t paying squat. This stock gets the highest grades for safety and has a 3% dividend that’s increased annually for more than 50 years. The two negatives are JNJ is dealing with a strong dollar and the long-term estimated total annual return is only 8% per year JNJ will rank 23rd of 34 stocks in the Conservative Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 23 of 34 |
