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Johnson & Johnson Message Board

  • toddfinances toddfinances Mar 24, 2008 6:37 PM Flag

    Price vs. Value

    That's all that matters here. Period.

    1) What is the business worth?
    2) What is it's current appraisal on Wall Street?

    Those are the only two important questions out there. Anything else is noise. In my opinion, JNJ is worth around $80 +/- and people have been able to buy under $62 recently. I was one of them. I believe I can make a 30% return just getting back to fair value. Plus, I get to make whatever JNJ makes per year on top of that. The "catch-up" price is just gravy. All told, that's a nice average, annual return looking out over the next 5 years.

    There is something else everybody should know. The future will not present itself by sifting through the recent past; neither will using goat entrails, tea leaves, a crystal ball, bone tossings or tarot cards. Remember Cleo? She had commercials on late night years ago and she promised to read your future with a nice Jamaican accent to boot. She was pulled off of the air but there are plenty of sooth sayers out there now to take her place. They're not gypsies, but they are a form of fortune tellers. They're technical analysis people. They will promise you they can predict the immediate future by studying the immediate past. If you believe them then I have nice ocean-front property here in Colorado I'd love to sell you. Just call 1 (800) IM - NAIVE.


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    • todd,
      you forgot the third important question-ie- if it's worth 80 why is it at 65?
      answer = because a megacap with 2% internal sales growth is not worth even 15x eps.

    • I like reading posts like yours.

      Such posts make me proud to be a value investor!

      Ahhh...the beauty (and fun) of growing wealthy slowly. :)

      • 1 Reply to cdanajackson
      • Cheers to that!!!

        I honestly could care less about short term fluctuations in price, the most important indicator is profiability (EPS) and it's climbing YoY. The market and everyone priced in all large Pharma's will have short term problems for the next year or two (which is all noise) but with JNJ's great future pipeline along with it's amazing diversification along with strong overseas growth ... What is not to like? (Great move on the Pfizer consumer product acquisition)

        Right now the best thing JNJ can do is become a leaner company by consolidating the businesses, cutting excess jobs and buying back shares while focusing on future profitablity, which they have been doing wonderfully. This should be a core holding in anyone's portfolio since the future is bright :)



    • You mean to tell me you don't believe in those head-and-shoulders-double-top-grandpa's-squatting-again formations all the technicians are always touting?

115.70+1.14(+1.00%)Oct 27 4:00 PMEDT