JNJ at 78,56 is selling at 14.5x 2013 year end numbers that is fully valued
They are going to earn $5.41 this year on a 4% revenue growth rate and 5.74 next year . Since companies sell base on the amount of growth they have lets be generous and give JNJ a 12 multiple or 2x its growth. Based on that the stock would be selling at $64.90 a share. It is way too high to be selling at almost15x earnings with little to no growth.
I think $86-90 is a decent 1 year target based on 15x next years estimates. JNJ has a dividend yield nearly 2x that of US Treasuries + a much better balance sheet than the US Gov't. The Emerging Markets will be next lever of growth for Consumer Staples and Rx Drugs -- the Middle Class of India, China, Brazil and Africa are all emerging over the next decade, and want what JNJ and the others sell... the secular growth story is still intact and will continue for years to come.
I remember in the Mid-90's the last time Consumer Stocks were considered growth names -- and PG bought Gillette for 30x P/E... and most names were trading in the 25X p/e area.
I think if JNJ (and many blue chip S&P 500) became more confident -- they would start buying back more stock and boosting dividends. JNJ is extremely underleveraged --- Net Debt Free...crazy !!
This year they are growing revenues 4% like last year. Earnings will be up again next year around6% as estimated by zacks just look under earnings in Yahoo. The stock is selling for more than twice its growth rate......