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
Why You Shouldn’t Get Excited About Gold Price Mini-Rally - 26th Jan 21
The Truth About Personal Savings Everybody Should Know and Think About - 26th Jan 21
4 Economic Challenges for 2021 - 26th Jan 21
Scan Computers 2021 "Awaiting Picking" - 5950x RTX 3080 Custom PC Build Stock Status - 26th Jan 21
The End of the World History Stock Market Chart : Big Pattern = Big Move - 26th Jan 21
Stock Market Recent Sector Triggers Suggest Stocks May Enter Rally Phase - 26th Jan 21
3 Top-Performing Tech Stocks for 2021 - 26th Jan 21
5 Tips to Manage Your Debt - 26th Jan 21
Stock Market Intermediate Trend Intact - 25th Jan 21
Precious Metals Could Decline Before their Next Attempt to Rally - 25th Jan 21
Great Ways of Choosing Good CMMS Software for a Business - 25th Jan 21
The Dark Forces behind American Insurrectionists - 25th Jan 21
Economic Stimulus Doesn’t Always Stimulate – Pushing On A String - 25th Jan 21
Can Karcher K7 Pressure Washer Clean a Weed Infested Driveway? Extreme Power Test - 25th Jan 21
Lockdown Sea Shanty Craze - "Drunken Sailor" on the Pirate Falls Crazy Boat Ride - 25th Jan 21
Intel Empire Fights Back with Rocket and Alder Lake! - 24th Jan 21
4 Reasons for Coronavirus 2021 Hope - 24th Jan 21
Apple M1 Chip Another Nail in Intel's Coffin - Top AI Tech Stocks 2021 - 24th Jan 21
Stock Market: Why You Should Prepare for a Jump in Volatility - 24th Jan 21
What’s next for Bitcoin Price – $56k or $16k? - 24th Jan 21
How Does Credit Repair Work? - 24th Jan 21
Silver Price 2021 Roadmap - 22nd Jan 21
Why Biden Wants to Win the Fight for $15 Federal Minimum Wage - 22nd Jan 21
Here’s Why Gold Recently Moved Up - 22nd Jan 21
US Dollar Decline creates New Sector Opportunities to Trade - 22nd Jan 21
Sandisk Extreme Micro SDXC Memory Card Read Write Speed Test Actual vs Sales Pitch - 22nd Jan 21
NHS Recommends Oximeter Oxygen Sensor Monitors for Everyone 10 Months Late! - 22nd Jan 21
DoorDash Has All the Makings of the “Next Amazon” - 22nd Jan 21
How to Survive a Silver-Gold Sucker Punch - 22nd Jan 21
2021: The Year of the Gripping Hand - 22nd Jan 21
Technology Minerals appoints ex-BP Petrochemicals CEO as Advisor - 22nd Jan 21
Gold Price Drops Amid Stimulus and Poor Data - 21st Jan 21
Protecting the Vulnerable 2021 - 21st Jan 21
How To Play The Next Stage Of The Marijuana Boom - 21st Jan 21
UK Schools Lockdown 2021 Covid Education Crisis - Home Learning Routine - 21st Jan 21
General Artificial Intelligence Was BORN in 2020! GPT-3, Deep Mind - 20th Jan 21
Bitcoin Price Crash: FCA Warning Was a Slap in the Face. But Not the Cause - 20th Jan 21
US Coronavirus Pandemic 2021 - We’re Going to Need More Than a Vaccine - 20th Jan 21
The Biggest Biotech Story Of 2021? - 20th Jan 21
Biden Bailout, Democrat Takeover to Drive Americans into Gold - 20th Jan 21
Pandemic 2020 Is Gone! Will 2021 Be Better for Gold? - 20th Jan 21
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21

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


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,


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.

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 - 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