Johnson and Johnson (JNJ) is an S&P 100 company and a core pharmaceutical holding in most Wall Street brokerages' recommended holdings list that has been selling at a discount in the recent weeks. As the economy recovers you should see a nice recovery in price, and conservative accounts might realize a 12% annual total return over the next 5 years. The 3.4% dividend yield is above average and at 45% of earnings looks safe to continue or even increase.
The chart provided by Barchart showing recent price action reveals that the stock is a cheaper buy every day.
Johnson & Johnson (JNJ) engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics.
- The Consumer segment provides products used in baby care, skin care, oral care, wound care, and women’s health care fields, as well as nutritional, over-the-counter pharmaceutical products, and wellness and prevention platforms under the brands of Johnson's, Aveeno, Clean & Clear, Johnson's Adult, Neutrogena, RoC, Lubriderm, Dabao, Listerine, Reach, Band-Aid, Carefree, Stayfree, Splenda, Tylenol, Sudafed, Zyrtec, Motrin IB, and Pepcid AC.
- The Pharmaceutical segment offers products in various therapeutic areas, such as anti-infective, antipsychotic, contraceptive, dermatology, gastrointestinal, hematology, immunology, neurology, oncology, pain management, and virology. Its principal products include Remicade for the treatment of immune mediated inflammatory diseases; Stelara for the treatment of moderate to severe plaque psoriasis; Simponi, a treatment for adults with moderate to severe rheumatoid arthritis, psoriatic arthritis, and ankylosing spondylitis; Velcade for the treatment of multiple myeloma; Prezista and Intelence for treating HIV/AIDS patients; Nucynta for moderate to severe acute pain; Invega Sustenn Atm for the acute and maintenance treatment of schizophrenia in adults; Risperdal Consta for the management of bipolar I disorder and schizophrenia; and Procrit to stimulate red blood cell production.
- The Medical Devices and Diagnostics segment primarily offers circulatory disease management products; orthopaedic joint reconstruction, spinal care, and sports medicine products; surgical care, aesthetics, and women’s health products; blood glucose monitoring and insulin delivery products; professional diagnostic products; and disposable contact lenses.
These Barchart indicators show a declining price momentum that may allow you to pick up a bargain:
- 56% Barchart technical sell signal -- technical sell signals can be a good reason to add to core holdings
- Trend Spotter sell signal
- Below its 20, 50 and 100 day moving average
- 13 new lows and down 6.22% off its recent high
- Relative Strength Index 27.93% and falling
- Trades around 63.94 which is below its 50 day moving average of 66.32
- Barchart support level is presently 63.82 which is very close to today's trading range
Look at the overwhelming recommendations that Wall Street brokerages have given to their clients:
- Wall Street brokerage analysts have released 6 strong buy, 8 buy, 10 hold and no negative or sell reports
- Sales are projected to increase by 6.20% this year and 5.40% next year
- Earnings are expected to increase by 4.40% this year, another 6.40% next year and continue to increase by 6.07% annually for at least the next 5 years
Even though the price is declining, the individual investor as measured on Motley Fool is still very high on this issue:
- The 13,691 readers on Fool that are following this stock have voted 97% that the stock will beat the market
- The more experienced All Stars agree with a 98% vote for the same result
Summary: If you believe the analysts' projections that Johnson & Johnson will have increasing sales and earnings in the future then this current price weakness may be an opportunity to either add to your present holding or make a new position at a discounted price. At the present price level JNJ is selling at a 15% discount to the rest of the market's P/E ratio. Since this company has a A++ financial strength rating and a 100% rating for earnings persistence and earnings predictability, invest by the numbers. My way to play this great opportunity is to milk the price weakness by putting in a moving buy stop at the 20 day moving average.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.