Opinions The Monthly Gems by Allan Tong
Johnson & JohnsonJNJTOP PICKAug 01, 2023
Stock price when the opinion was issued
As of Jun 08, 2026. Market Open.
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Owns neither. Of the two, he'd prefer JNJ. Hesitant to put them in the same basket. With spinoff of healthcare, it's now much more into pharmaceuticals (doing very well) and medical devices. Valuation is not that demanding. Executing well.
PG is a consumer products company. Consumer is in some difficulty, and jury's out as to whether we've seen the worst of that dip.
Great year, so valuation has expanded. Shedding lower-growth businesses, focusing on medical devices and pharma. Those 2 areas are higher-margin businesses, so success would mean multiple could continue to expand. Legal overhang diminished.
If you already own it, you can hold it for dividend growth and potential upside. If you don't own, buy via an ETF.
Tough one. Spun out KVUE, which is in a nice space, but the stock's done nothing. JNJ is now more drugs and medical devices, and its stock's done nothing either. Drug companies are difficult to own, really have to do your homework.
He doesn't want to recommend selling. Drug pipeline sounds good. Good earnings release, and has a bit of earnings momentum behind it. So might not be the time to sell. Yield is ~3%.
High in 2022, series of lower highs and lower lows since then. Only positive is that on the most recent pullback it pulled back to a higher low. If you own it as one position among many, you probably won't lose a bunch of $$. Doesn't see it being a leading stock in the near term.
Lean into companies that are economically sensitive with pricing power; if their costs go up tomorrow, they can raise prices the next day.
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Consider JNJ the opposite of safe PG. Sure, some will defend JNJ as a perennial stock winner and universal brand. However, this company is sinking deeper and deeper into lawsuits without an end in site. At last count, there were 38,000 suits alleging that its famous Baby Powder and other talc products contain traces of asbestos that can cause ovarian cancer and mesothelioma. In a pathetic move, JNJ last month sued four doctors who published such findings. Then, at the end of July, a court blocked JNJ's plan to settle tens of thousands of lawsuits by paying $8.9 billion in bankruptcy court. This was JNJ's second such attempt and again a court reasoned that the talc lawsuits did not put the company in immediate “financial distress.”