Is Johnson & Johnson a Worthwhile Investment?

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With shares of Johnson & Johnson (NYSE:JNJ) trading around $87, is JNJ an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework.

T = Trends for a Stock’s Movement

Johnson & Johnson engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. The company offers a range of products used in general care, women’’s health fields, nutritional and anti-infective, contraceptive, gastrointestinal, oncology, pain management, and vaccines. It also offers products to treat cardiovascular disease, orthopedic and neurological products, blood glucose monitoring and insulin delivery products, and general surgery products. Through its wide variety of health care products, Johnson & Johnson is able to support consumers and medical businesses around the world that continue to demand improved products.

Johnson & Johnson is reportedly in talks to pay up to $3 billion to settle 11,500 lawsuits related to its recalled ASR hip implant. The implants were recalled in 2010 after more than 12 percent of them failed within five years. That figure keeps climbing, along with the number of people filing suits against the company. The company would like the suits to be settled by the beginning of next year, but if plaintiffs don’t settle for the proposed $300,000 each, litigation could continue.

T = Technicals on the Stock Chart Are Mixed

Johnson & Johnson stock has broken out to new prices earlier this year. The stock is now trading slightly below all-time high prices, but it may need time to stabilize here. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Johnson & Johnson is trading between its key averages, which signals neutral price action in the near term.

JNJ

Source: Thinkorswim

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