Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Gold & the USDX: Correlations - 2nd Dec 20
How An Ancient Medicine Is Taking On The $16 Trillion Pharmaceutical Industry - 2nd Dec 20
Amazon Black Friday vs Prime Day vs Cyber Monday, Which are Real or Fake Sales - 1st Dec 20
The No.1 Biotech Stock for 2021 - 1st Dec 20
Stocks Bears Last Chance Before Market Rally To SPX 4200 In 2021 - 1st Dec 20
Globalists Poised for a “Great Reset” – Any Role for Gold? - 1st Dec 20
How to Get FREE REAL Christmas Tree 2020! Easy DIY Money Saving - 1st Dec 20
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
BLOCKCHAIN INVESTMENT PRIMER - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20
MUST WATCH Before You Waste Money on Buying A New PC Computer System - 27th Nov 20
Gold: Insurance for Prudent Investors, Precious Metals Reduce Risk & Preserve Wealth - 27th Nov 20
How To Spot The End Of An Excess Market Trend Phase - 27th Nov 20
Snow Falling Effect Christmas Lights Outdoor Projector Amazon Review - 27th Nov 20
4 Reasons Why You Shouldn't Put off Your Roof Repairs - 27th Nov 20
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Healthcare Sector the Place to Find Safe Triple-Digit Gains Right Now

Companies / Healthcare Sector Jun 25, 2010 - 05:46 AM GMT

By: DailyWealth

Companies

Best Financial Markets Analysis ArticleDr. Steve Sjuggerud writes: Since starting my True Wealth newsletter in 2001, I've avoided buying big U.S. stocks.

I've avoided big-name stocks because I thought they were too expensive. But now, for the first time in my career, I'm finding value in some big U.S. stocks… particularly in one sector.


Look, stocks today (as measured by the big indexes) are currently cheaper than they were 11 years ago, back in 1999. The important thing is this: While the share prices are lower, many companies have grown dramatically…

Consider the case of Johnson & Johnson... Its share price is in the $50s today, like it was at its highs in 1999. But since then, the business has grown dramatically. Now, you get a whole lot more business for your investment buck.

Warren Buffett – the world's most successful investor – likes to measure the growth in his business by its growth in book value. By that measure, Johnson & Johnson is 70% cheaper today than it was in 1999 because of its growth. Back then, J&J traded for 10 times book value. It trades at three times book value today.

J&J has rarely been this cheap... And history tells us we really want to own it when it gets cheap!

J&J dipped below four times book value in early 1994... The share price soared 150% within two years. You have to go back a quarter-century to find it as cheap as it is today. And of course, the stock soared after that as well: Shares doubled in less than two years and tripled in just over three years.

It's also cheap when you look at earnings. J&J is trading at 12 times earnings right now. Shares have only been this cheap a couple times in history. In all instances, you could have made a heck of a lot of money...
J&J fell to 11.9 times earnings in March 1980. The stock doubled in less than three years.

In June '84, it traded down to 10.9 times earnings. The stock nearly tripled over the next three years.

Its next big valuation low was April 1994, at a price to earnings of 13.8. The stock tripled in three years.
It seems like investors have given up on drug companies like J&J. Whether it's worries about patent expirations, dry drug "pipelines," lawsuits... or just simply boredom after a decade of no return, shareholders have thrown in the towel.

But J&J isn't going away. I don't know about at your house, but around my house we are big J&J customers for life – without even realizing it...

We use Listerine. We have for decades. We aren't changing. We use Band-Aids. We have for decades. And we aren't changing. We use Neosporin... The list goes on, longer than you can
imagine. These are all Johnson & Johnson brands.

And then there are the drugs, including Tylenol, Motrin, Sudafed, Benadryl, and more. J&J has probably infiltrated our house more than any other company in America. These J&J brands are insulated from economic downturns. We will continue to use these products at home... indefinitely.

And these are just a few examples of brands you recognize from J&J. The company does a lot more than Band-Aids and Tylenol. Importantly, it holds the No. 1 or No. 2 rank in 70% of its products.

Despite all of this... the stock is dirt-cheap. I was talking about this with my colleague Frank Curzio, who writes the super-exclusive Phase 1 Investor advisory. He said, "I can't think of one risk that's not already priced into these stocks... and at some price, everything is a buy."

I think "some price" is today's price...

Keep in mind, Johnson & Johnson is a no-debt business. (With $18 billion in cash, it has more cash than debt.) It has an incredible collection of brands, which should insulate it from economic downturns. It has one of the best drug pipelines in the industry: It's developing drugs for pain, arthritis, and heart disease. Finally, the company knows its stock is cheap... It has bought back $9 billion worth of its own stock since 2007, and will likely buy back $1 billion more over the rest of this year.

Most big pharmaceutical companies are at record cheap values – by far. Many are significantly cheaper than Johnson & Johnson. History shows when these stocks get this cheap, triple-digit gains follow.

In True Wealth, I look for sectors that are cheap, hated/ignored, and just starting an uptrend.

Big drug companies are record cheap, investors have given up on them, and we might be seeing a glimmer of an uptrend.

A safe, simple way to play the big drug companies is through the iShares U.S. Health Care ETF (IYH). Its largest holding, incidentally, is Johnson & Johnson.

I'm almost never interested in Big Pharma... But I'm buying now. It's just too cheap to ignore.

Good investing,

Steve

P.S. In the latest issue of True Wealth, I recommended a unique way to get into Big Pharma. It's not a typical stock or a mutual fund… but I believe we have the potential for gains of up to 300% over the next three years… profiting from the exact Big Pharma companies we want to own. Click here to sign up for True Wealth.

http://www.dailywealth.com

The DailyWealth Investment Philosophy: In a nutshell, my investment philosophy is this: Buy things of extraordinary value at a time when nobody else wants them. Then sell when people are willing to pay any price. You see, at DailyWealth, we believe most investors take way too much risk. Our mission is to show you how to avoid risky investments, and how to avoid what the average investor is doing. I believe that you can make a lot of money – and do it safely – by simply doing the opposite of what is most popular.

Customer Service: 1-888-261-2693 – Copyright 2010 Stansberry & Associates Investment Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Stansberry & Associates Investment Research, LLC. 1217 Saint Paul Street, Baltimore MD 21202

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Daily Wealth Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules