Johnson & Johnson (JNJ)

(A Top Pick April 20/17, Up 10%) Recent pullback partially due to scare about their talcum powder. JNJ is the biggest, most diversified healthcare company in the world. Deserves to trade at a premium—16 times next year earnings. It should be worth more. Divident solid. Great pipeline in pharmaceuticals and medical devices. Healthcare is his biggest overweight in the U.S.

Has dropped, along with everything else. You have to consider whether it is cheap at this level. If you look beyond the past few days, you will see that at the beginning of 2017, it was trading at about $100 per share. Now it is over $128, so today’s price is significantly increased over a short time. The business trades at a low multiple at this level (15 to 16 times earnings), near “cheap” levels. JNJ is made up of three businesses: pharma, consumer products and medical devices. The company might be more interesting if it split these into separate businesses. He doesn’t think investors will go wrong by holding this company as is, but this is not a pound-the-table opportunity at this price.

They owned it and sold it moving the money to another pharmaceutical that was offering better value. Good company. 2.4% dividend yield. Trades at 17 earnings. Had a higher multiple not long ago. Unique in the sense that has three different businesses: pharma, consumer products and medical devices. Those three together has made it very profitable and diversified. Increase its dividend for the last 15 years in a row. They make good small acquisitions. If the market pull back, it is a protective stock as it won’t collapse. Very stable business.

She likes this, because their pharmacy division is doing very well in terms of product pipeline development and new products they’ve launched in the last 2 years. Their Pharma division is the most profitable and very beneficial to the bottom line. This will be benefiting from the US tax cuts. An attractive yield of 2.4%.

A very large US company. Pharma, consumer products and medical devices. Great balance sheet, triple ‘A” rated. The first two areas are doing well right now, but have done better. Expect good earnings and cash flow.

(A Top Pick Dec 14/16. Up 28%.) She continues to like this. All 3 divisions are doing well, but their pharmaceutical division is doing particularly well.

A well diversified bucket in healthcare names. It's well run and pays a reasonable dividend, which they grow regularly. They have appropriate free cash flow to balance things out. What he really likes is that it is a diversified portfolio in healthcare. A good pick here.

The US$ has weakened against all currencies this year, and for US multinationals that is going to be a nice tailwind for them. About 50% of revenues come from North America. About 45% of revenues come from the pharmaceutical division, and then they have the medical devices and the consumer products division. Their Pharma division has really started to show nice organic growth, and investments in their pipeline are paying off. Going forward, management has indicated they expect to file 10 new products by 2019 with revenue potential of $1 billion, so she sees good visibility in the pipeline going forward. Organic growth is picking up. They increase the dividend every year and have done so for the last 55 years. Dividend yield of 2.5%. (Analysts’ price target is $142.)

This has run out of upside potential. It also hit one of his very strong technical resistance points. A barrier that is very, very hard to overcome.

He is going to continue to hold this because the long term potential is fantastic. Remicade came off patent this year and had a slippage this year more than the street expected. You have your JNJ baby labels, shampoo and big pharma and then all of your medical devices. They are quite diversified. You need to see some backfill on the bottom line really justify the next leg up.

He really likes that this is well diversified. Each bucket tends to work pretty well. They have a huge consumer brand. He really likes the stability and cash flow that devices can provide. A high single digit grower, not shooting the lights out, but that is what he likes. He is positive on this.

(A Top Pick Sept 13/16. Up 16%.) Still likes this. Their pharmaceutical division, consumer products division and medical device division all play into an aging demographics. The pharmaceutical division is doing quite well right now. Has a lot of new products that are doing well. She sees decent earnings growth in the high single digits range. Very strong balance sheet. Pays a dividend of just over 2%, and has increased the dividend for the last 56 years.

A diversified health care company with pharmaceuticals, medical products and consumer products. She likes this. It is well diversified. Their Pharma division is doing quite well. It has a very strong triple A balance sheet. They typically increase their dividend and has done so for the last 50 years. Growth has been improving because of their pharmaceutical division. Valuations are still reasonable. For the long-term, this is a very good holding.

This has had fairly low volatility. They are diversified between Pharma, consumer products and medical devices. Diversity helps them, but also hurts them in that it is difficult to focus on 3 business lines that are quite different. It has had a decent year, up about 15% year to date. Trading at around 19X, and you are getting a 2.5% dividend yield. Just made a large acquisition, so you may want to wait to see how that is digested. Consider buying only a half position now.

This is fairly valued right now. He doesn’t own this because two thirds of the businesses are doing well, but the consumer side is falling away. The pharmaceutical side has been doing well. The dividend growth is only in the 6%-7% range. The stock is trading at a big multiple that could come under pressure.