Johnson & Johnson
Healthcare giant Johnson & Johnson (JNJ) has outperformed the fast-moving market in 2013 with 35% gains year-to-date vs. about 20% for the S&P 500. The reason has been a renewed focus on quality after some high-profile recalls over the last few years, and a new CEO to take the reins and reshape the firm after longtime J&J exec William Weldon stepped down.
You know the case for stability in JNJ stock — its focus on a recession-proof sector, its consumer products like Tylenol and Band-Aids to keep cash flowing, its global scale and its nice 2.7% dividend yield are just a few.
But the rebound has already happened at Johnson & Johnson as earnings have been on the rise — and frankly, details aren’t super encouraging since its medical device business just missed expectations and there are fears that another miss could weigh significantly on shares.
The long-term case based on JNJ’s product pipeline could still stand, but be careful in the short term, what with the forward P/E of about 16.2 and the risk of shares overheating.
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at email@example.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.