Paul Harris, CFAJohnson & JohnsonJNJTOP PICKSep 11, 2023

Great new drug profits and excellent balance sheet. Up 2% during a sharp sell-off in the market

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.

They report Tuesday. It has the most blockbusters and best drugs in its pipeline. However, they often get hammered after their news release comes out in the morning. If so, buy some shares.

It reports Wednesday. It's become a pharma pure-play after spinning off its orthopedics division. Smart. It has some of the best drugs in their pipeline. They do have an overhang with the talcum-cancer lawsuit, but is no longer a threat to the stock itself.

Is spinning off it orthpedic business, which has slower growth than the drug business. A fine company. Buy now on weakness.

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.

Up 24% this year due to their strong research work and drug pipeline. It's better than the pack.

Up 23% this year. Their core pharma business is roaring, medical devices business is strong and their oncology franchise is fine. The talcum litigation remains an issue, though.

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%.

It reports Wednesday, but the overhang of the talcum powder lawsuits will overshadow that report.

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.

He sold it in March since the earnings estimates were coning down and the fair market value dropped a bit. There are better places to go for free cash flow. The whole health care space is being attacked by the government.

Has a triple-A balance sheet and many drugs in the pipeline. But it pays only a 3.55% dividend, below interest rates, and still suffers the legal overhang of its talcum powder allegedly caused ovarian cancer.

It reports Tuesday when we should get a legal update about those suing JNJ for cancer allegedly being in their talcum powder.  It's been stuck in a range forever, though not in a perpetual downturn like other pharma. This could turn around on any big news on any new drug.