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Originally Posted by Whosonfirst
Using the VW idea, or Phillip Morris, many years ago; I love it when it a large profitable company gets hammered by a Billion dollar settlement. Johnson and Johnson has just moved into that list. $4.8 Billion settlement for selling talcum powder for what, 100 years? Kind of disappointed that today's price is only down 1.30 on light volume. Maybe it's already priced in when it was over 140 a share. Will have to wait and see. Hopefully the MSM will hammer them in the coming days or weeks. I covered the VW idea at length on another web site and was lambasted mainly because a lot of people hated their service and the MSM did all the work for me. They outperformed a hot stock market over 1-1/2 years.
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You need to ask yourself how much money you are willing for pay for JNJ?
Future capital gains returns are simply judged by how much you paid for your original stock purchases.
A quick glance at JNJ on Yahoo finance tells me that they have $16 billion in Free Cash Flow ... at a market cap of about $343 billion that is about 21 times FCF.
At 21 times JNJ is far from being overly expensive. I would rate it a hold if I was in that game. I try to buy companies under 15 times at a minimum, and load up the truck when great companies sell at 10 times or less. Apple, Neflix, Microsoft, Viacom, Gilead, Discovery, Accenture, and a few others were all purchased by me over the past 15 years when they sold at these bargain prices.
A metric that I find disappointing is ROE at under 2 per cent. Must be near a historic low. A small positive is 13 % sales growth in the last quarter. They've also paid a dividend for about
100 years -- not sure exactly but it's like forever. A great sign always!
Good luck.
