Johnson & Johnson Will Reward Patient Investors

| About: Johnson & (JNJ)

Another amazing day for the markets. Between the Fed's cautions about the economy, the EU's continued distress, and Apple (NASDAQ:AAPL) taking a hit, we have another schizophrenic day on Wall Street.

At last look, Johnson and Johnson (NYSE:JNJ) was down over 3%, which erases yesterday's gains plus some. The question is whether JNJ is a buy, a hold, or a sell.

Let's take a peek:

  • JNJ increased sales by 16.8% ($16 billion)
  • It increased net profits by 0.08% ($3.4 billion and diluted $1.24 billion)
  • It increased the top-end range of its full-year estimates to $5.00/share
  • International sales were the driving force, as the dollar remains (and will remain, in my opinion) weak.
  • JNJ launched 8 new drugs, which added to the company's sales growth -- and this is just the beginning.

Does this sound like a broken company? Yes, it has had its recall problems and plant shutdowns, but it achieved the results in spite of those occurrences! That screams out to me, "Buy More!" (I already have JNJ as a core position.)

The report was not stellar by any measure; however, should the price be languishing around the $62 mark? I don't think so. The stock hit its high of $72 in late 2008 and has been bouncing around since then, with an upward bias. Today it closed down $1.78, 2.76% at $62.64.

My opinion: JNJ has been taken along the volatility train, and some are using a pretty decent earnings report to oversell the stock. With a dividend yield of over 3.5% or $0.57 per share, we are also getting paid to wait.

By using some options strategies, which I have outlined in a previous article, I believe that buying at these dips will pay off in the not too distant future, and can also mean a great short-term trading opportunity for those so inclined.

Disclosure: I am long JNJ.