With all that has been experienced by individual investors and professional money managers these past few days, I am sure millions of us went right to Johnson and Johnson's (NYSE:JNJ) key products. The maker of Tylenol, Pepcid AC and Nicorette gum has probably seen some revenue spike since Tuesday!!
All kidding aside, the mega-consumer company has household recognition and brand awareness second to none. Most households have at least four or five JNJ products in the medicine cabinet such asTylenol, Pepcid AC, Nicorette Gum, Sudafed, and of course the BAND-AID. JNJ also has a serious research and development effort in many prescription drugs and cardiac medications. JNJ has its hands in arthritis, cardiac, epilepsy, psoriasis and many other drugs serving large addressable markets.
JNJ is selling at a 16 PE multiple of December 2007 earnings expectation of $3.90 per share on revenues of $59 billion. Numbers for 2008 are earnings of $4.28-4.30 per share on revenues of $64-65 billion. JNJ pays a healthy, easily covered dividend of $1.50, which is a current yield of 2.3%. The coverage of the dividend is 2 1/2 to one, so a nice dividend increase could be coming. With the stock at $62.93 there are good reasons to see JNJ up past $72-73 by year end.
Georges Yared is the author of "Stop Losing Money Today" and "Baby Boomer Investing...Where do we go from here?"
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