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No. of Recommendations: 36
I’ve been a JNJ shareholder since December 1999. I bought more shares in August 2003 and May 2006. My overall position is down about 3% because the May 2006 shares are down 14%

I’ve always viewed JNJ as “the rock” of my portfolio. It is the largest single position, and if I were to sell, I’d feel like I had given up on stock picking. But the depressing environment made me consider selling.

Then, today, I received the Annual Report. I must admit that I don’t usually read it diligently, but this time I did. All I can say is WOW ! Years ago I worked in Pharmaceutical R&D, and more recently in medical diagnostics.So I think I have a “feel” for the healthcare business. To say that JNJ is the “leader” in this area would be an understatement. They have a huge footprint in all of the major areas, including diagnostics, pharmaceuticals, medical devices, etc. A lineup of winning products, and
an incredible reputation for innovation and quality.

I came away with the feeling that JNJ is suffering lately from two problems:
1) the slowdown in the world economy, and
2) pharmaceuticals are not the “cash cows” they have been in the past.

Personally, I think it’s only a matter of time before the economy starts to grow again. And healthcare? Warts and all, it has phenomenal growth potential. And JNJ has a strong and diversified stake, which seems likely to profit from the healthcare needs of our aging society.

But, for good measure, I checked on what analysts have been saying. Two of my favorites, S&P and Value Line, are bullish on JNJ. More importantly, the numbers on their reports look very good to me.

If I did not have a position in this stock, I’d probably buy. If it wasn’t my largest position, I’d add shares. For myself, I think the smart thing is to hold.

See you next year!

Jack
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