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Johnson & Johnson Continues to Prove its Value in a Volatile Year

Johnson & Johnson Continues to Prove its Value in a Volatile Year

JNJ stock gives investors exposure to a basket of defensive stocks 

Johnson & Johnson (NYSE:JNJ) is scheduled to release its second quarter earnings report on July 19, 2022. Analysts tracked by MarketBeat expect the company to report earnings per share (EPS) of $2.59. That’s a 4% year-over-year (YOY) increase from the $2.48 it reported in its 2021 second quarter. Revenue is expected to come in at $23.86 billion which is a 2% YOY increase. 

In the last several years, YOY growth like that wouldn’t do much to excite investors. But in 2022, investors will take growth wherever they can get it. And in this article, we’ll take a closer look at the reasons why investors should consider adding JNJ stock to their bear market portfolio. 

A Defensive Stock of Defensive Stocks 

The first reason that investors can consider investing in Johnson & Johnson is because it’s a great defensive stock. This means it offers products that consumers will continue to buy regardless of the state of the economy.  

However, most defensive stocks only cover one sector. Utility companies are a good example of this. While defensive stocks are not known for capital growth, being limited to one avenue for growth is even more limiting.  

By contrast, investing in JNJ stock gives investors exposure to multiple sectors all of which provide essential products and services for consumers. The company is well known for its health care and wellness products. But the company also gives investors exposure to the medical technology sector as well as the pharmaceutical sector. This gives the company several avenues for growth. And although the segments are complementary, they are not identical. That means weakness in one doesn’t mean weakness in all.  


A Company with Proven Pricing Power 

JNJ stock finished the week before its earnings report almost right where it started the week. Along the way, it was dragged down by the hot inflation numbers. The Consumer Price Index (CPI) and Producer Price Index (PPI) remain at levels that haven’t been seen in 40 years.  

That means that many investors haven’t experienced this kind of inflation as consumers, let alone investors. However, this is a time when investors need to look at the bigger picture. As J&J is likely to show in its earnings report, it is able to manage the effects of inflation better than many companies.  

That’s not surprising. In January, the company made a list of stocks to buy from Goldman Sachs (NYSE:GS). The sole criteria was to find stocks that had showcased pricing power over the last five years. That explains why the company has delivered a workmanlike 34% gain over that same span. 

JNJ Stock Checks All the Boxes in a Bear Market 

In a bear market, the game plan for investors remains simple. Retail investors should look to buy stock in companies that meet two criteria. First, they should offer products that are essential to consumers. Second, they need to have the pricing power to pass along the higher producer costs being caused by inflation.  

Johnson & Johnson checks both those boxes and it’s also a Dividend King. Specifically, the company has increased its dividend every year for the last 61 consecutive years. And it has a dividend payout of around 60% which looks very sustainable with the company’s consistent ability to generate revenue and earnings.  

At a time when many investors are looking for reasons to avoid stocks, JNJ stock is providing many reasons that remind you of the kind of stocks you should be looking for.  

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Johnson & Johnson (JNJ)
2.3327 of 5 stars
$166.36+0.9%2.72%24.22Moderate Buy$189.78
The Goldman Sachs Group (GS)
3.3097 of 5 stars
$300.79+3.2%3.32%6.80Moderate Buy$410.79
Compare These Stocks  Add These Stocks to My Watchlist 

Should you invest $1,000 in Johnson & Johnson right now?

Before you consider Johnson & Johnson, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Johnson & Johnson wasn't on the list.

While Johnson & Johnson currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Chris Markoch

About Chris Markoch

Contributing Author: Retirement, Individual Investing

Chris Markoch is a freelance financial copywriter with over five years of experience covering various aspects of the financial markets. You may find his writing a little different than other stock articles you’ve read. And that’s OK with him. Chris doesn’t have a traditional finance background. What he does bring to the table is a strong business and marketing background having worked for agencies that serviced Fortune 500 companies. With that in mind, he isn’t overly impressed with what companies say, and more focused on what they do. And because buyer behavior dictates so much of what happens with a stock, Chris always keeps the end consumer close in mind. Chris has been writing for MarketBeat since 2018.

Contact Chris Markoch via email at CTMarkoch@msn.com.
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