a PEG of 2.27 isn't expensive. PEG doesn't contain any information at all- whether through dishonesty or incompetence, professional "analysts" are shockingly bad at forecasting earnings and earnings growth.
large caps are predominantly held by institutions. institutions hold a stock mostly because other institutions hold that stock. so... yeah. welcome to stock investing. if you've got a systematic way of making your decisions, and keep good notes (so you can debug- quality control is *everything*), you are immediately and permanently in the 95th percentile.
Put simply, PEG is a metric that's more important for younger, rapidly growing companies. Something as big as J&J just doesn't grow that fast, because it's well established in almost all of its markets.
That also means that you're not likely to see huge capital gains from holding the stock. What you are getting is a stable stock. It typically provides a limited up and downside (share price change), and a regular return in the form of dividends, making it a relatively safe play. If you're looking to double your money in the next year, this is the wrong stock. If you're looking for a better return than your bank provides, with relatively low risk, this is a decent choice.