Stock (Symbol) |
Johnson & Johnson (JNJ) |
Stock Price |
$124 |
Sector |
| Healthcare |
Data is as of |
| July 28, 2016 |
Expected to Report |
| Oct 11 – 17 |
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. The Company’s subsidiaries operate 134 manufacturing facilities occupying approximately 21.5 million square feet of floor space. The Company’s research facilities are located in the United States, Belgium, Brazil, Canada, China, France, Germany, India, Israel, Japan, the Netherlands, Singapore, Switzerland and the United Kingdom. Source: Thomson Financial |
Sharek’s Take |
 Johnson & Johnson (JNJ) is having a banner year, and that looks to continue as profits are expected to climb 10% during the second half of the year. Sales growth of 4% last qtr was much better than the 1% growth 3 months ago, and is accelerated growth. JNJ has also beaten the street the last 4 qtrs as Annual Profit Estimates have been nudging higher. J&J has 3 divisions:
J&J’s credo is “Business must make a sound profit” and JNJ had done so as its grown profits every year since 1984. The company has a AAA rating from S&P and a dividend that’s has increased every year since 1963. Around half J&J’s sales are International, but F/X only hurt sales by 1.4% last qtr vs. 3% in the previous qtr. JNJ stock has gone from $103 to $124 this year, and sells for 19x earnings. With double-digit profit growth on the horizon this stock should remain timely, but the recent rise has taken away some of the long-term potential. |
One Year Chart |
 Solid move in this stock after it broke out at $103 earlier in the year. Although qtrly profit growth hasn’t been great, J&J has been fighting the strong dollar and now the negative affects are subsiding. Profits are expected to climb 11%, 9%, 5% and 5% the next 4 qtrs. With a 3% yield all we need is 7% stock growth to get a double-digit return in one of the two the safest stocks in the world. |
Fair Value |
 JNJ currently sells for 19x earnings, up from 17x last qtr. The stock is at my Fair Value but with estimates rising and good growth ahead JNJ might be able to hit 20x earnings next year. 20 times the current estimate of $7.11 would be a $142 stock hypothetially. |
Bottom Line |
 Johnson & Johnson is in my opinion the most conservative stock for investors who want growth. Analysts give it an estimated long-term growth rate of 7% a year in addition to a 3% yield. A lot of the numbers in this report were good, and that should keep JNJ timely. But the P/E of 19 is higher than the median P/E in any of the last ten years, thus I wouldn’t be a big buyer here. JNJ ranks 28th of 37 stocks in the Conservative Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 28 of 37 |
