Why It Is The Best Time To Invest In Johnson & Johnson

Let me tell you why you should put your money in Johnson & Johnson (JNJ) today. Johnson & Johnson's stock has been rising in the last two months. Last Friday, July 13th, it exhibited 52-weeks high at $68.61, beating its previous record of $68.15 per share. This is the result of several factors that show Johnson & Johnson is off to new heights. Johnson & Johnson's successful acquisition of Synthes, Inc. is one huge future growth area for the company. There are new developments in its efforts to settle legal issues with its shareholders and the government. Moreover, the stock is doing pretty well compared to its competitors in the industry.

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JNJ data by YCharts

Profile of Johnson & Johnson

Based in New Jersey, Johnson & Johnson is a healthcare conglomerate manned by 117,900 employees. The company manufactures and sells a wide range of health care products. These include consumer products - baby care, oral care, wound care, and women's health. Johnson & Johnson is the maker of Tylenol, Listerine, Aveeno, Clean & Clear, RoC, Neutrogena, and Band-Aid, to name a few. Johnson & Johnson's diversified product line also includes nutritionals, medical devices, over-the-counter drugs, and prescription drugs. It is behind the prescription drugs Edurant, Xarelto, and Zytiga.

The company carries out research and development of new products to meet medical needs in various therapeutic areas like immunology, neuroscience and pain, cardiovascular and metabolism, infectious diseases and vaccines, and oncology. In 2011, Johnson & Johnson invested $5.1 billion on research and development. It has a solid and visible commitment to developing new products. Approximately a quarter of its products sold in 2011 were those introduced in the past five years.

The company's global exposure is increasing. In 2011, 55% of its sales came from outside the United States. Its stock has a market capitalization of $188 billion and currently trades at $68.6. It is a profitable company that has enjoyed consistent dividend increases for 50 consecutive years including the April 2012 increases. In fact, Johnson & Johnson has recently been listed to the Dividend Channel S.A.F.E. 25.

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JNJ Dividend data by YCharts

There are signs that the company has already recovered from the crisis. Worldwide sales grew by 5.6% in 2011, exceeding its pre-crisis growth rate of 4.3%. A company as large as Johnson & Johnson growing at over 5% in a post-crisis era is indeed promising.

Aside from these, an important characteristic of Johnson & Johnson is its stability. Across other sectors, the stock is fairly stable with a Beta of 0.55. Beta is a measure of how sensitive the company returns are to that of the market. The farther the Beta is from 1, the less sensitive the stock is.

So how does Johnson& Johnson fare against its competitors ?

I look at key financial ratios such as EPS and BVPS. Both are in favor of the stock. Earnings per share of Johnson & Johnson at 3.65 is above those of Pfizer (PFE) [1.23], Merck (MRK) [2.24], and Abbott (ABT) [3.24]. The book value per share of Johnson & Johnson also beats the competitors' ratios. Johnson & Johnson enjoys 22.35 per share while Merck and Abbott follow at 18.83 and 16.25, respectively. Pfizer, meanwhile, only has 11.11.