Many of us on the JNJ board have been wondering why our beloved Johnson and Johnson has tumbled 40 points from its high made just a few months ago and is now setting 52-week lows daily. Many analysts and others have suggested that investors are fleeing from slower growing blue chips to get into the fast growing and always exciting technology sector. But why? Why would people give up solid companies with good products and a wonderful history to invest in internet companies with no profits and outlandish valuations? The people who invest in such tech companies merely say, "But technology is where the future is! Ten years from now, these internet companies will be making tens of billions of dollars." Oh, now I get it. It is all just speculation! Wall Street has turned into Caesar's Palace! Why am I not excited?One of my favorite sayings of all time came from Paul Samuelson in The Ultimate Guide to Indexing. In that book, Paul says, "Investing should be like watching paint dry or grass grow. If you want excitement, take $800 to Las Vegas." Unfortunely for me and many other investors, Las Vegas has come to us. Investing in the stock market is not a game; it is a way to make money over the long term, not over 15 minutes! The people who continue to talk about how wonderful internet stocks are are the people who are trying to predict the future. Unfortunately for them, the future is not known by any person; only the past and the present are known. JNJ has a terrific past, and outstanding present, and (in my opinion) an impressive future. Unfortunately, most internet stocks don't even have a past, and their present is pretty ugly. Johnson and Johnson has increased revenues, profits, and dividends at an impressive rate for over 100 years. Give me JNJ any day over an internet venture!In this months edition of Individual Investor, the magazine lists 10 top blue chips for the 21st century. Not surprisingly, JNJ is one of them, along with AOL, Walmart, Fedex, General Electric, Citigroup, MCI Worldcom, Home Depot, Nokia, and Oracle. If you ask me, that is quite nice company for JNJ to be with! Individual Investor goes on to tell the reader why it picked each stock that it did. Even though the article was written in early January, when JNJ was trading at 97, the fundamentals for the company have still not changed. "Johnson & Johnson, which has no fewer than 150 websites, from herniasolutions.com to yourbaby.com, has been remarkably adept at reinventing itself, broadening its line of prescription and over-the-counter remedies and hospital and medical supplies by relentlessly acquiring firms with new products. During the past decade, it moved into skin care, surgical products, heart disease treatment, orthopedic devices, and, with its recent acquisition of Centocor, now has the world's second largest biotechnology business, after Amgen. The company is boosting its biomaterial business with such new products as joint replacements and angioplasty stents (the tiny mesh-like tubes that keep arteries clear). JNJ also has a well-stuffed pipeline containing drugs for Alzheimer's disease, influenza, obesity, and pain, all due to be introduced within the next two years. With an estimated $30 billion in revenue in 2000, JNJ is set to deliver a 15% annual profit growth rate through 2004. That prospect, along with a recent slide in share price to below $100, makes for a buying opportunity."I am quite excited at JNJ recent price drop because that just enables me and many of you other Fools to stock up on a solid blue-chip company with the best reputation in America!Always Long,Spriteman
Spriteman-----Good post;you said alot.. You've incited a couple of thoughts topical and otherwise..... We're getting caught up in ,what is being referred to as the P&G effect....For some odd reason their short-term demise is(has)affecting other like and not so like stocks(short-term effect?) Old-line and non-tech blue chips are not the thingy for the newer genre^ of investors(see;quick-bucks)! Somewhere between convergence,sector rollover(as in out of favor),and the re-emergence of solid numbers; being the reason to purchase stocks is all in limbo 'till a great melding of all investment strategies come to acceptance(hard to fathom though)...More or less,accepting the fact that;companies with solid earnings and mature businesses belong in portfolios along side the go-for-the-gusto tech/communications types... We are involved in a new,yet to be accepted,way of following the impact of different evaluations;aka.-number crunchin' along side unfettered prospects;purely out-and-out perception and nothing else to go on.... I liked your reminder,"In this months edition of Individual Investor, the magazine lists 10 top blue chips for the 21st century. Not surprisingly, JNJ is one of them, along with AOL, Walmart, Fedex, General Electric, Citigroup, MCI Worldcom, Home Depot, Nokia, and Oracle" I'm lucky enough to have 3(JNJ-Oracle-MCI Worldcom)in my 10 stock portfolio.... Keep posting!!!You do a credible job! seeya-----papajoe13
Looks like a lot of J&J people read/write Fool Message Boards. Hope you, like myself will be working hard to make all our predictions come true re the stock rebound. I can guarantee I'll have a great year; hope all the other J&Jer's are pulling their weight.By the way our Internet Strategy still needs some work - but as the one thing you want from the web is knowing you can trust those on the other end, JNJ must have an edge.Good Boarding.
I couldn't agree more with this post. Fortunately, my wife & I bought our first shares sevreal years ago & are still up quite a bit, even with the recent drops. What's happening right now is good for us in that it allows us to channel all of our monthly DRiP contributions to JNJ, which should really pay off in the future (more shares = more dividends + increasing dividends = even more shares).
Great post Spriteman. This Egghead first JnJ purchase at 67 11/16 and going long. I was a tech head until last Feburary 17th when I dump my Dell at a lost. Even I know this nasdaq insanity can't have much more to go. And when that happens, where do you think the money going to come back to? You said it Blue Chips. I don't buy that B.S. on cnbc about old economy stocks. It still about Fundamentals. The idiots who are paying anything for internets will pay dearly someday when the Fundamentals become a reality. Right now I hear Fundamentals don't matter P.E. don't matter. We will see.
I've owned J&J since Jan 1997. J&J is unquestionably one of the 5 strongest stocks on the Dow to keep. It was attactively valued at $108 (year high), but it is the Dow's best buy at $71. Why would anyone buy an upstart bio-try stock when you can own the best at a bargain? It's like you suddenly noticed the best looking girl at the dance-alone. Don't miss a golden opportunity - it may only knock once.
It is great to know that I am not alone in my thoughts on JNJ. Spriteman, you hit my feelings right on the head! (which is where those into internet stocks need to be hit)JNJ's recorded past and future sure looks more sound then most and I for one am buying more. Someday we can look back and wonder why more were not with us.
Like the best looking girl at a dance alone. Now that is rare and a thought. lol You have a better odds of getting jnj cheap then that lonely girl. Unless she a high priced dance girl. lol
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