Summary
A continuation off a solid fiscal 2017; management has this blue-chip heading in the right direction.
The company maintains its fortress balance sheet with its AAA S&P credit rating.
After the recent pullback from $148, JNJ is trading below its recent five-year average P/E.
Investment Thesis
Year to date, Johnson & Johnson's (JNJ) stock has retreated about 10%, meanwhile the Health Care Select Sector SPDR ETF (XLV) has gained about 4.5%, where JNJ is the largest holding. As recent as the end of May, JNJ was exchanging hands at levels we have not seen since February 2017. In performing our research on the blue-chip conglomerate, we believe the stock is trading at a discount and has the potential to perform well going into the second half of the year. The company maintains its fortress balance sheet with its AAA S&P credit rating combined with double-digit growth in revenue and EPS. The pipeline is full of products that will continue to fuel the growth fire moving forward and the company is guided by a highly competent management team. Based on the company’s fall in price through 2018, we recommend JNJ as a BUY for the second half of the year.
