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5-Star Stocks Poised to Pop: Johnson & Johnson

By Brian D. Pacampara, CFA - Updated Apr 5, 2017 at 8:02PM

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Market-trouncing returns could be written in this five-star stock.

Based on the aggregated intelligence of 120,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, health-care-products giant Johnson & Johnson (NYSE:JNJ) has earned a coveted five-star ranking. Our data has shown that five-star stocks outperform the market by a significant margin; conversely, one-star stocks have woefully lagged the market average.

With that in mind, let's take a closer look at Johnson & Johnson's business, and see what CAPS investors are saying about the stock right now.

Johnson & Johnson facts

Headquarters (founded)

New Brunswick, N.J. (1885)

Market Cap

$163.4 billion

Industry

Pharmaceuticals / health care

TTM Revenue

$64.5 billion

Management

CEO William Weldon (since 2002)
CFO Dominic Caruso (since 2007)

Brands

Band-Aid, Listerine, Sudafed, Tylenol

Return on Equity (average last three years)

27.1%

Dividend Yield

3.1%

Competitors

Merck (NYSE:MRK)
Eli Lilly (NYSE:LLY)

CAPS members bullish on JNJ also bullish on

Procter & Gamble (NYSE:PG)
General Electric (NYSE:GE)

CAPS members bearish on JNJ also bearish on

Microsoft (NASDAQ:MSFT)
General Motors (NYSE:GM)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, fully 2,615 of the 2,677 All-Star members who have rated Johnson & Johnson -- some 97% -- believe the stock will outperform the S&P 500 going forward. These bulls include hazelnut283 and rd80, both of whom are ranked in the top 10% of our community.

Late last month, hazelnut283 noted that the stock "has become a rare, relatively stable beacon in the sea of chaos. A good dividend, and tons of foreign exposure (re: even kids in India and China use JNJ products daily), make this one for the long-term."

In a more recent pitch from last week, rd80 shares that sentiment, tapping Johnson & Johnson as an ideal way to play defense

Pharma, medical supplies, and consumer staples. JNJ has nice dividend yield and strong track record of raising the dividend year after year. The company's balance sheet is net cash positive, meaning if credit markets totally seized up, they could continue operating by paying off debt rather than rolling it over.

JNJ products will continue to be sold even in a bad economy, so the company has good earnings visibility - a rarity right now. PE is low, earnings are likely to continue growing at slow-to-moderate rates and investors get paid to hold the stock.

When the economy starts to recover, JNJ will lag the market. But, until then, it's one of the few reliable, predictable safe investments around.

What do you think about Johnson & Johnson, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 120,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Johnson & Johnson and Eli Lilly are Motley Fool Income Investor picks. Microsoft is an Inside Value selection. The Fool's disclosure policy always gets a perfect score.

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Stocks Mentioned

Johnson & Johnson Stock Quote
Johnson & Johnson
JNJ
$165.30 (-1.10%) $-1.84
Merck & Co., Inc. Stock Quote
Merck & Co., Inc.
MRK
$91.02 (2.35%) $2.09
Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$291.91 (1.70%) $4.89
Eli Lilly and Company Stock Quote
Eli Lilly and Company
LLY
$308.08 (2.63%) $7.89
General Electric Company Stock Quote
General Electric Company
GE
$79.93 (1.30%) $1.03
General Motors Company Stock Quote
General Motors Company
GM
$39.48 (2.65%) $1.02
The Procter & Gamble Company Stock Quote
The Procter & Gamble Company
PG
$146.67 (0.97%) $1.41

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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