On Tuesday's Market Foolery, host Chris Hill and Motley Fool Special Ops analyst, Tom Jacobs, dip into the latest profits released from Johnson & Johnson (NYSE:JNJ) and discuss how large the company has become. Can shareholder profit if the company becomes stagnant in growth?
Although Johnson & Johnson's profits out today offer higher than expected results and strong sales of a new Hepitisis C drug in its pharmaceutical sector, shares are down a bit due to guidance that seems cautious. Tom thinks that new competition will be coming into the Hep C space and that JNJ doesn't own the space. Chris thinks that the guidance offered by Johnson & Johnson is short term thinking. Tom talks about the moves in the company and describes JNJ as the "Berkshire Hathoway of the health care field" although JNJ will spin and sell off businesses. Chris wants to know how much larger the company can become and Tom quickly answers, "not much." Yet, he believes that shareholders can still make money on the company with buy backs and dividends.
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Chris Hill owns shares of Johnson & Johnson. Tom Jacobs has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.