Johnson & Johnson: Opportunity for Value Investors

by Alligator Investor


The health care sector has lagged the broader market all year, and Pfizer’s announcement that they will cancel research on their most promising experimental drug, torcetrapib, seems likely to send all the major pharmaceutical companies into a tailspin this week. I will be watching Johnson and Johnson like a hawk. I already own JNJ but I would be interested in buying more at the right price.

JNJ is such a large and well-known blue chip figure in the health care industry that it needs no description. The Johnson & Johnson brand name itself is a priceless asset. The company manufactures and distributes too many high quality over-the-counter consumer products to list. JNJ is, of course, also a major player in pharmaceuticals, and in addition the company offers a wide range of products for treatment of circulatory disease, orthopedic joint reconstruction, spinal care, wound care, minimally invasive surgery, blood glucose monitoring, and professional diagnosis, and they sell disposable contact lenses. This multinational company has a major presence almost everywhere in the world. JNJ is without doubt one of the world’s greatest companies. It has an enviable record of rising earnings and steadily increasing dividend payments to shareholders. It is a component of the Dow Jones Industrial Average.

From time to time, the shares of this remarkable company become reasonably priced. Such is the case right now. There has been considerable fear on Wall Street about what the Democrats may do, and the drug business has been coming to grips with well-known issues threatening profits. All of this has been causing a drag on JNJ’s price performance and the shares have been starting to look remarkably cheap in relation to their quality and future potential. Signigicant price weakness at this juncture will create an irresistable opportunity for value investors.


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