Johnson & Johnson (JNJ) is one of the biggest manufacturers of medical and personal care products on the planet; its massive $330 billion market cap reflects its sprawling footprint across the global economy, explains Todd Shaver, growth and income expert and editor of BullMarket.com.
The stock has yet to recover from the 1Q18 correction, creating an opportunity for investors who appreciate the mix of dynamic and defensive products.
While over-the-counter drugstore brands still account for a $14 billion slice of Johnson & Johnson’s revenue, the real center of gravity here is now a broad portfolio of proprietary prescription medications, surgical hardware and vision products.
Peel back the mature domestic markets for brands like Band-Aid, Janssen shampoo, Listerine and Tylenol and this is a highly innovative company where cutting-edge medical science can make a big difference on the bottom line.
Johnson & Johnson’s pharmaceutical franchise spans all of the biggest disease categories around, with bona fide blockbuster products in immunology, neuroscience, oncology, cardiovascular and now hypertension.
A few familiar names include Remicade and Simponi (arthritis), Xarelto (a blood thinner, Imbruvica (cancer), Stelara (psoriasis), Zytiga (prostate cancer) and Invega (antipsychotic). In addition, the company's Jannsen subsidiary just revealed that the FDA has approved a revolutionary treatment for HIV patients.
While $5.7 billion in profit ($2.10 per share) in its latest quarter was only a hair above our target, the medical giant is still growing the bottom line 15% over last year, which is enough to justify a healthy upside. For a stock with this growth profile to be off its all-time high by 13% flies in the face of logic.
We highly recommend this company for long term investors. The future looks not only bright but discounted, as the multiple has dropped to 15X our earnings target. That's compelling to say the least. If we could predict the future, we might be looking at a $150 stock in the next 12 months.
