Thursday, March 12, 2009

Johnson and Johnson 2

As I said yesterday, I will talk about what analysts say about this stock (NYSE-JNJ) today. The other thing to note is that the 2008 annual report is just out and I used this to update my spreadsheet and I will republish this spreadsheet today.

What I noted is that some of the 5 and 10 year growth rates are down as a result of the 2008 December figures. However, in most categories, this stock still made a decent showing. The worse showing is the 5 and 10 year growth in the closing price. However, this is to be expected as we are still in a bear market.

In looking at the charts on this stock, it has done better than the S&P 500 in all periods, except the YTD period and in this period is about even with this index. The thing I noted that this stock has basically gone sideways since 2005. It has had its ups and downs, and you could have make money, in US$ if you bought at the relative lows and sold at the relative highs. However, this is not how I like to invest. I like to buy and hold a stock. You also might have made money by buying at a relative low and then holding, but it is easier to pick relative lows looking back at a stock, than to pick relative lows at any particular point in time.

Looking at the ratios on this stock, current P/E of 10.8 is lower than the 5 year average of 17.8 and this point to a current good price. Also, the current yield is 3.8% against the 5 year average of 2.3%, so this would point to a current good price. The current book value of 4.4 is lower than the 5 year average of 5, so this would point to a good price. The negative is that the current stock price of $48.70 is still higher than the graham price of $37.00. You tend to get higher stock prices on growth stocks, but I do not think of JNJ as growth stock. Even with the current fall in stock price, the current price is about 30% off the Graham Price.

Looking at the analyst ratings, there are lots of Strong Buys, Buys and Holds on this stock, with the consensus rating being Buy. (See my site for information on analyst ratings.) I looked at insider buying and selling and it seems to be pretty much a mixed bag, so we do not learn anything there. However, there was more recent insider selling than insider buying

Johnson & Johnson is engaged in the manufacture and sale of a broad range of products in the health care field in many countries of the world. The company's worldwide business is divided into three segments: Consumer; Pharmaceutical; and Professional. Its web site is See my spreadsheet on this company at

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at for a list of the stocks for which I have put up spreadsheets on my web site.

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