Johnson & Johnson (JNJ)

There are 3 parts to their business; pharma, medical devices and consumer products. Medical devices are about 40%, and consumer products are about 20%. Unfortunately, that 60% has had fairly flat growth. The Pharma sector has really been the rock star. Each business would be large enough to stand alone, and you would be better off if the business was split into 3. Decent dividend of about 2.7%.

A well-run dominant business in many of its key brands from a consumer product standpoint as well as a big healthcare business. Not overly cheap. Has owned this in the past.

(Market Call Minute.) This is a company that has been growing debt, buying back stock and increasing dividends. Ultimately hasn’t increased its revenue in 4 years.

This would be in the category of a “forever” stock. A very, very consistent and diversified performer. The type of company that supports a constituent of the index that would respond well after the election. He looks for stocks that have higher returns on equity and higher growth rates than this company, but this is one that you could buy, put it away and forget about it.

One of the big, long term successful companies. The big reason for the stock drop lately is Remicade, its largest drug. Pfizer has something which is going to be priced 5%-10% cheaper. If you are going to be in any of the large cap healthcare stocks, this is the one.

Drug companies and medical companies have been under a lot of pressure, and a lot of it is politically driven. The US has the highest cost for drugs globally, but also has the most number of pharmaceutical companies. This one is very diversified. His understanding of the California proposition 61 is for regulating drug prices. California kind of leads the nation in terms of propositions. Overall though, this is a fabulous company, and he would use this weakness as an opportunity to Buy.

He would run away. They are a good offering but the valuation is a little too high. People gravitate towards what they think is quality. It is trading at 20 times earnings and have low growth. He prefers others.

One of the few healthcare companies that has held up. There are no catalysts, however. It is a very solid company that pays a good dividend and has growing earnings. Stick with a winner.

With JNJ-N you are not worried about insurance and health plan payments. They are continuing to get a higher multiple. It is probably not a bad way to play it.

Sell? His short answer would be Yes. It is up about 16% year to date, and over the last 52 weeks it is up about 30%. A good quality name. This has benefited from the hunt for yield. The Pharma side is what has really carried this company over the last few years. You can always come back and buy this again.

A diversified global healthcare company. About half is pharmaceuticals, and have medical devices as well as consumer brands. In terms of their pharmaceutical division, it has a lot of earnings momentum right now and has been very successful in some of their product launches. Not only are their existing products doing well, but they have a full pipeline. They’ve identified 10 drugs that could potentially be $1 billion drugs over the next 3-5 years. R&D is about 13% of their revenue, so while they do some acquisitions, they are also doing internal development. Dividend yield of 2.72% and has increased the dividend for the last 54 years.

(Market Call Minute.) Has worries about what is happening in the healthcare space in terms of drug pricing, etc. However, the nice thing about this is that it has the consumer products division, so it is a nice diversified health care name.

Great company. 3 different divisions. Pharmaceutical is 45% of revenue, medical devices about 25%, and consumer products of about 19%. This is the 54^th year that they have increased their dividend. Dividend yield of 2.58%.

Trades at a higher multiple, because it is a better quality company. Very well-managed. There are 3 income streams 1) pharmaceuticals, 2) devices and 3) the consumer. This is basically international. The dividend is likely to grow, but slowly. This is a name that will hold up if we get market declines. He wouldn’t expect significant growth.

8% of a portfolio. A fabulous company, and it could go higher. Has a really good pipeline of drugs under development, and could be one of the faster growing drug companies in the next 2-3 years. However, it recently hit a 52 week high. He would Sell maybe 10%-20% of your holdings, which would still leave you with a very significant holding. Doesn’t like to have things much over 6%-7% of his fund, and you should follow similar rules. However, from a valuation standpoint, it is not cheap, but does have upside because it is such a pure name. It also has defensive characteristics.