E Johnson & Johnson: Recession Safety, Growth And Valuation

As the ongoing bull market has become the longest in history and S&P is trading at an all-time high, many investors are afraid that a bear market is just around the corner. Consequently, they hesitate to have exposure to stocks, fearing that the losses from the current levels may be devastating. However, it is a shame to miss the exceptional long-term returns of the stock market due to abstract fears of a bear market, particularly given that no one can time bear markets. Therefore, in this article, I will analyze Johnson & Johnson (JNJ), which offers exciting growth prospects, a reasonable valuation and resilience to recessions and bear markets.

Resilience to Recessions

Johnson & Johnson has proven markedly resilient to recessions. In the Great Recession, the worst financial crisis of the last 80 years, most companies saw their earnings collapse and S&P lost 55% in less than two years. On the contrary, Johnson & Johnson continued to increase its earnings thanks to the nature of its products. As both its consumer products and pharmaceutical products are essential to consumers, the latter do not reduce their consumption of these products even under the most adverse economic conditions. As a result, Johnson & Johnson significantly outperforms the market during recessions. In the Great Recession, the stock lost 33% from peak to trough, much less than the broad market, and thus made it easier to its shareholders to retain their shares, particularly given that it continued to grow its earnings and its dividend.

Growth Prospects

Most investors know this stock from its consumer products and thus consider it a mature stock. The consumer segment is facing increasing competition, as it has become easier than ever for new brands to be promoted at a low cost via social media. Moreover, the online giants, such as Amazon (AMZN), are trying to disrupt the supply chain and sell products directly to consumers. As a result, this segment of Johnson & Johnson reported marginal sales growth last year and flat sales in Q2.

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Stuart Saunders 1 year ago Member's comment

Alexis,

I got an ‘Inventor of the Year Award’ for an electronic thingy; so went around the world three times, looking for a maker. I met hundreds in consumer electronics - all loved it, curiously, no willing ‘partners’?! While traveling, I carried J&J or Oral B floss in my pocket; which can actually be quite painful. I made a note to design ‘a comfortable dental floss’. Got time to do so, a few years later; made a sample & took it to a local pharmacy chain; immediate order. Got it going; patents, production line, orders, delivering.

It gets Gold or Silver Medals in every exhibition entered; & has been described as the ‘Rolls Royce’ of dental floss.

After debugging production, I wanted / needed to sell or get a partner, (no option, electronic thingy had used all funds) so tried, in good faith, to talk to the ‘oral majors’. Unfortunately, no ‘common sense’ from anybody; one co refused an offer of $1M - for lock stock & barrel - but later boasted that they spent $1,050 million, changing a 3 blade razor to a 4 blade razor?!? Defies logic, IMO.

I was warned by an ‘insider’ about trying to do business with J&J. She said they will just talk and talk and talk - & this is what happened, with local office. Talk and talk and talk - as predicted. So asked local GM Bob if he could arrange a meeting with J&J Intl HQ / US. He arranged a meeting, so I flew half way around the world to US / NY using last of funds; hopes high, situation dire.

Called J & J New Jersey in the a.m., after arrival. ‘Oh I’m sorry, we don’t have time to meet you’

When the bank foreclosed on the farm, which was Dads' purpose in life, & which had been used as collateral for funds for the Inventor of the Year thingy, he had a stroke and subsequently died.

Inventors, be warned. Many companies get their ‘kicks’, baiting inventors, possibly at the behest of some IP mafia? J&J are said to have done it this to at least one other, that I know of.

Bloody disgrace, if you ask me, considering J & J was founded on inventions; with Robert Wood Johnsons’ antiseptic surgical supplies, & later Band Aids.

Stuart Saunders,

Intellectual Property Rightful Owners Action Group.

Craig Newman 1 year ago Member's comment

Or Stuart, it could be your product wasn't that great or not worth $1 million. Just because they rejected it/you, doesn't mean they are an untrustworthy company.

Stuart Saunders 1 year ago Member's comment

Could be, Craig, but not. How often do they get Gold Medals for their floss? They dealt in bad faith. They agreed to meet - but after the time, effort and money, i.e. I had flown half way round the world to meet them, they 'changed their minds' - not about the product, but about even having a meeting.

Sabotage.

Do they have a record of dealing in good faith with independent inventors? Thought not. OK, surprise me!

Stuart Saunders 1 year ago Member's comment

I'm all ears, Craig.

Bill Johnson 1 year ago Member's comment

Unfortunately, this is pretty common with big companies. Remember Palm Pilot? Ever hear how they stole the sylus pen (the thingee that could change from a stylus to a pen) from an inventor who pitched the idea to them. It was a simple but brilliant idea so they just declined the offer and went on to make it on their own, even though the inventor had a patent. But Palm Pilot had a huge legal team while the inventor was just one guy. Fighting it would have bankrupted him.

Stuart Saunders 1 year ago Member's comment

Inventors, do not trust johnson and Johnson $JNJ

Alexis Renault 1 year ago Member's comment

How so?

Stuart Saunders 1 year ago Member's comment

Alexis,

I got an ‘Inventor of the Year Award’ for an electronic thingy; so went around the world three times, looking for a maker. I met hundreds in consumer electronics - all loved it; curiously, no willing ‘partners’?! While traveling, I carried J&J or Oral B dental floss in my pocket; which can actually be quite uncomfortable. So I made a note to design ‘a comfortable dental floss’. Got time to do so, a few years later; made a sample & took it to a local pharmacy chain; immediate order. Got it going; patents, production line, orders, delivering.

It gets Gold or Silver Medals in every exhibition entered; & has been described as the ‘Rolls Royce’ of dental floss.

After debugging production, I wanted / needed to sell or get a partner, (no option, electronic thingy had used all funds) so tried, in good faith, to talk to the ‘oral majors’. Unfortunately, no ‘common sense’ from anybody; one co refused an offer of $1M - for lock stock & barrel - but later boasted that they spent $1,050 million, changing a 3 blade razor to a 4 blade razor?!? Defies logic, IMO.

I was warned by an ‘insider’ about trying to do business with J&J. She said they will just talk and talk and talk - & this is what happened, with the local office. Talk and talk and talk - as predicted. So asked local GM Bob if he could arrange a meeting with J&J Intl HQ / US. He arranged a meeting, so I flew half way around the world to US / NY using last of funds; hopes high, situation dire.

Called J & J New Jersey in the a.m., after arrival. "Oh I’m sorry, we don’t have time to meet you"

When the bank foreclosed on the farm, which was Dads' purpose in life, & which had been used as collateral for funds for the Inventor of the Year thingy, he had a stroke, and later died. Mum and he had fed, housed and educated 8 kids, and been a major force for good in our community.

Dad was my mentor; we used to invent together, sitting around the breakfast room table till all hours. It was as if we became one mind. He died hating my guts.

Inventors, be warned. Many companies get their ‘kicks’, baiting inventors, possibly at the behest of the IP mafia? J&J are said to have done it this to at least one other, that I know of. I am sure there will be more.

Bloody disgrace, if you ask me, considering J & J was founded on inventions; with Robert Wood Johnsons’ antiseptic surgical supplies, & later Band Aids.

Stuart Saunders,

Intellectual Property Rightful Owners Action Group.