Why Johnson & Johnson (JNJ) Could Be A Buy
Johnson & Johnson (NYSE:JNJ) saw its share price hover around a small range of $129.9 to $136.57 over the last few weeks. But is this actually reflective of the share value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at JNJ’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for Johnson & Johnson
Is JNJ still cheap?
According to my valuation model, JNJ seems to be fairly priced at around 12% above my intrinsic value, which means if you buy JNJ today, you’d be paying a relatively reasonable price for it. And if you believe that JNJ is really worth $114.74, there’s only an insignificant downside when the price falls to its real value. Furthermore, JNJ’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for JNJ to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
What does the future of JNJ look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares.Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 38.96% over the next couple of years, the future seems bright for JNJ. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? JNJ’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at JNJ? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on JNJ, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for JNJ, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Johnson & Johnson. You can find everything you need to know about JNJ in the latest infographic research report. If you are no longer interested in Johnson & Johnson, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
