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.
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.
If you're buying a stock for earnings growth a 2.28 PEG is fairly high, but that only tells part of the story. PEG focuses on earnings growth to the exclusion of free cash flow. When you combine earnings growth, and money returned to shareholders through buybacks and dividends, the PEG ratio becomes a far less relevant metric for valuing a company like PG. Investors also put a premium on the stability of PG's earnings stream. That is to say, if you look out 5 years, this stock doesn't look particularly expensive at today's prices, and you can be fairly confident that the company will be able to meet earnings estimates over the long term.
JNJ has the PE ratio (23) of a growth stock--but its not. The EPS has been dropping steadily while the price goes up. Dividends are popular right now, but the PE ratio will come backtoward the mid teens. With the negative earnings growth, I suspect that the price will drop to make it happen.