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Johnson & Johnson Message Board

  • banmate7 banmate7 Jul 11, 2013 6:18 PM Flag

    Is JNJ PE = 24 & PB = 3.7 a SELL Signal?

    I'm averaged in at $53, accumulating shares since 2006 whenever there is a value opportunity. My total return is now 68% versus 27% for the S&P 500 during this time horizon. I am obviously very pleased.

    However, I wonder if a PE = 24 & 3.7 is a sell signal? Anybody know historically what these numbers are? I'm just wondering if it's worth it to sell "high" & buy in "lower"...either on J&J or something else that is compelling in value?

    My value investing instincts say no. Something tells me J&J will make more ongoing revenue & profits as the economy improves & Americans age. It's also hard to part with a proven winner when my plan is to hold until I retire. I'm obviously much better at buying stocks than selling.

    Any thoughts on J&J in this context? Thanks in advance.

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    • The PE is inflated because of a large writedown JNJ took on one-time litigation and merger expenses. If I recall correctly, the normalized PE would be something like 17x current earnings and 15x forward earnings.

    • sit back and enjoy the dividend. Meantime JNJ will not move much from here. Its realistic to expect a range of 85 -92 IMHO for the next year. If you're not happy with this, be my guest and invest in another stock that will do better than JNJ....overall. When you find this stock, tell us.........don't keep it a secret.

      • 1 Reply to zer0t0l
      • I said I was very pleased, did I not? I was just wondering if the price is a bit high now, offering alternate compelling value. Additionally, I said my instincts are against selling.

        They still are, so I remain a long time hold, not least because there might be a 15x forward earning.

        Speaking of value, in the past year I moved heavily into INTC & NOV. I've been accumulating into GLW. All are at a good value. I actually expect them to beat JNJ because of this over the next 5 years. Time will tell.

 
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