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Eddy Elfenbein submits: Has anyone else noticed how cheap Johnson & Johnson (NYSE:JNJ) is? Good, I thought it was just me. Nearly a year ago, the stock was at $70. Today, it’s around $57.

The company dodged bullet thanks to Boston Scientific (NYSE:BSX) snatching Guidant (GDT) from them. I was terrified that J&J was going to get stuck with Guidant. As you may have heard me say before, I’m not a fan of mega-mergers.

One of the best ways to find good values on Wall Street is look for the strongest stocks in the weakest sectors. Right now, that’s health care. While Merck (NYSE:MRK) and Pfizer (NYSE:PFE) are having their problems, the good stocks like J&J are also being punished.

I’ll give you another good example of this. In 1990, almost all financial stocks were tossed in the garbage. AFLAC (NYSE:AFL) is one of the best around, and even they saw their stock plunge from (post-split) $3 a share to $1.70. To make a short story shorter, now it’s at $46.

So yes, Johnson & Johnson will manage to survive. The company is Wall Street’s version of a blue blazer. It never goes out of style. The most recent catalyst for J&J’s shares to fall was its “weak�? earning report. Of course, for J&J, weak is relative. Earnings came in at 73 cents a share, which was in line with the Street’s estimate. But the surprise was that for the first time in 22 years, revenues declined. The company also guided slightly lower for this quarter.

For the year, J&J sees earnings of $3.78 to $3.85 a share, which means the shares are going for about 15 times earnings. Notice how we saw Medtronic (NYSE:MDT) also fall on fundamentally good earnings. It’s just because it’s a large-cap health care stock. On Wall Street, you simply can’t argue with a mob. If they want to see bad news, they’ll find it.

I also expect J&J to raise its dividend soon from 33 cents a share to (I'm guessing) 37.5 cents, which is a yield of 2.6%.

Here’s a chart of J&J over the past 18 years. Note the P/E ratio line.

Source: J&J Is Looking Cheap (JNJ, BSX, MRK, PFE)