Johnson & Johnson: Why I'm Not A Buyer And What I Would Buy Instead

22-06-2014 Seeking AlphaComments (0)

Johnson & Johnson

Johnson & Johnson (JNJ) has been a terrific buy and hold stock for decades. While I believe JNJ will be a good investment for the long-term, I also believe that JNJ is currently overvalued and is not a good buy right now.


Based on a number of key metrics, JNJ is trading at high valuations relative to historic norms. One of the primary reasons why JNJ is trading at high valuations relative to historic norms is the low interest rate environment. JNJ's dividend yield of 2.66% is attractive for income investors considering the extremely low interest rates on bonds. However, aggressive buying in JNJ has pushed the stock to overvalued territory. Given this, it is difficult to see how JNJ could make a big move higher from here.

JNJ PE Ratio (Forward) data by YCharts

JNJ PS Ratio (TTM) data by YCharts

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