Comparing JNJ with its closest competitor, Abbott Labs, JNJ is projected to grow over five years at 6% and ABT at 9.5%. JNJ est. earnings per share for '11 are 4.97 and ABT's are 4.66. For this additional .31, you get to pay 12 dollars per share extra for JNJ stock, while awaiting its next recall. Simply put, at least compared to ABT, JNJ is overpriced.
Good point. I've been into JNJ and ABT DRIPs for over 11 years and follow them closely. Like all stocks at some point every few years they get insanely cheap. Why ABT is cheap mystifies me, but I'm not complaining. It gives me more optional cash payments and dividend reinvestments at the cheap price. Only negatives on ABT is there maybe fear it's a one drug drug company as Humira is something like 17% of revenue. The market may not like the debt ABT took on with recent acquisitions like Solvay. Compared to JNJ, ABT is much better managed.