In today's first-round matchup of The Motley Fool Better Buy Tournament, Johnson & Johnson (NYSE:JNJ) squares off against Amazon.com (NASDAQ:AMZN) in a battle to determine which stock is the better buy now. The 64-company tournament pits two Motley Fool analysts against each other as they make the case for their stocks, with the winner determined by you, the readers.
Johnson & Johnson is the big, diversified player of the pharma space, but that doesn't make it a sleepy conglomerate, argues Motley Fool analyst David Williamson. Its pharmaceutical division is cranking out consistent double-digit growth rates thanks to strong products like Zytiga in prostate cancer and megablockbuster Remicade, and the success continues with recent approval for Imbruvica, a blood cancer drug with expected peak sales in the $6 billion-$7 billion range. Its medical device business is set for growth following the massive Synthes acquisition, and J&J is wisely selling off lower-margin diagnostics. This is a steady stock with a strong dividend, but a pharma division firing on all cylinders provides meaningful upside for investors.
To say that Amazon.com has led the e-commerce revolution would be an understatement. It practically penned the history books for the world of retail as we now know it. With 237 million active users compared to "only" what the company calls "tens of millions" of Amazon Prime subscribers, the company's continued growth potential is undeniable. Whether its strong network effect or domineeringly low-cost operation serves as its main advantage, Amazon now has the clout to adjust prices. Despite what looks like a stretched valuation, Motley Fool analyst Michael Finarelli believes bigger profits will come, and shareholders should continue to be rewarded.
Watch these analysts square off in the video below, then vote for a winner. Then check out the other companies in the Motley Fool Better Buy Bracket.
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Cast your vote in the poll below the video!
David Williamson owns shares of Johnson & Johnson. Michael Finarelli has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com and 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.