Johnson & Johnson

This report reflects the research and analysis I've performed on this company. It is provided for informational purposes only and does not constitute personalized financial advice nor an endorsement or solicitation to purchase stock in this or any other company. Please do your own due diligence or hire a financial advisor before making any investment decisions.

2007, Nov 11: Selling JNJ

Johnson & Johnson

JNJ: 07/18/2007

Current Price: @ US $62.10, Market Cap: US $180B, Dividend: $1.66 (2.60%)

Intrinsic Value: $78-$85
Accumulation Range: $62 or better

No in-depth report on this one. I've been watching Johnson and Johnson for awhile now and with the recent earnings report out of the way, it's safe to come in.

There is a story floating around of how Tweedy & Browne, the value investment firm, were interested in Wells Fargo and had assigned an analyst to go out there and do research. Then word got out that Warren Buffett's Berkshire Hathaway had taken a position in the bank. Tweedy & Browne called back their analyst and simply bought the stock. They figured their analyst probably wasn't going to do a better job than Buffett. It's much the same here for me with JNJ.

Berkshire has doubled their position in the stock. S&P have a 4-star buy rating on the stock. Morningstar have a 5-star strong buy rating on it. Value Line have it in 2 of their 3 model portfolios.

Their operating history is stellar. You can almost bank on increased dividends, whatever the short-term drag from anemia drugs or heart stents. They are broadly diversified, more so with the addition of Pfizer's consumer products unit. And nearly 50% (and growing) of their revenues come from overseas so there's some protection against the US dollar.

Finally, it's another "running downhill" situation with the US demographics potential. The boomers are set to retire and you want to get in front a little. Yes, healthcare reform is coming sooner or later and no, I don't know what that's going to look like but it's a good bet that Johnson & Johnson will do alright in any case.

DISCLOSURE: Please see our portfolio page for all disclosures.

The Enlightened American

Johnson & Johnson