Johnson & Johnson and Medtronic: Healthcare Stalwarts Worth Investing InJohnson & Johnson and Medtronic: Healthcare Stalwarts Worth Investing In 1. Johnson & Johnson (NYSE: JNJ) * Operates across the pharmaceutical and medical device industries with a diverse product portfolio. * Predictable revenue and profits, despite recent legal and regulatory challenges. * Planning to spin off its consumer health division to boost revenue growth. * Long history of navigating the healthcare industry with innovation and adaptability. * Dividend King status with 62 consecutive payout increases. * Currently trading at a P/E ratio of 13.8, below industry and market averages. 2. Medtronic (NYSE: MDT) * Global medical device giant with a presence in over 150 countries. * Strong product portfolio with frequent regulatory approvals and label extensions. * Focus on growth opportunities in artificial intelligence and robotic-assisted surgery. * Diabetes care is another key growth area due to the increasing prevalence of the disease worldwide. * Approaching Dividend King status with 47 consecutive payout increases. * Trading at a P/E ratio of 14.2, considered reasonable for its potential. Should You Invest $1,000 in Johnson & Johnson Now? * Consider that despite its current challenges, Johnson & Johnson has a proven track record of success. * The company’s focus on innovation, diversification, and dividend history make it a long-term investment. Conclusion Both Johnson & Johnson and Medtronic are well-established healthcare companies with solid fundamentals. Despite their recent growth challenges, they are expected to continue delivering returns and dividends to investors. Their current valuations make them attractive investment opportunities for those seeking stability and long-term gains in the healthcare sector.
Healthcare never sleeps. There is always a demand for medical services, regardless of the state of the economy. Companies that provide these necessary goods and are innovative enough to keep up with the changing trends in the industry usually survive. That describes Johnson & Johnson (NYSE: JNJ) And Medtronic (NYSE: MDT) good. Both are among the largest healthcare companies in the world, have proven to be innovative, and have a long track record of success. And despite their failure to catch up this year, Johnson & Johnson and Medtronic are still worth investing in. Let’s discuss why.
1. Johnson & Johnson
Johnson & Johnson’s operations span the pharmaceutical and medical device industries. It is one of the more prominent players in both. Its product portfolio in these industries is large, extensive and diversified. Within the pharmaceutical sector, Johnson & Johnson develops medicines in oncology, immunology, infectious diseases, neuroscience and more. The company also has more than 10 blockbuster medicines. The medical device segment is active in vision, surgical, orthopedics and an interventional solutions franchise.
The company’s revenues and profits are generally predictable. In other words, Johnson & Johnson’s business seems like a picture of stability, at least on paper. That hasn’t been the case in recent years, however. A number of problems, particularly legal and regulatory, have damaged the company’s business and image. That includes the thousands of lawsuits the company has filed over its talcum powder — plaintiffs say it gave them cancer — and a new U.S. law that allows Medicare to negotiate the price of some medications.
These headwinds won’t be the undoing of Johnson & Johnson, however. One of the recent moves to improve its outlook is the decision to spin off its consumer health division into a standalone company. This should boost revenue growth in the medium term, as consumer health has been the weakest segment in that space. Johnson & Johnson also bolstered its medtech business with the acquisition of Abiomed, which focuses on developing products to improve patients’ heart health, in a transaction valued at just under $17 billion. While these are some of J&J’s latest moves, it’s also important to note its long history of navigating the highly regulated healthcare industry. History is no guarantee, but Johnson & Johnson has demonstrated a culture of innovation and a company that is flexible enough to adapt to the changing demands and challenges of various regulatory rules and guidelines.
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Finally, Johnson & Johnson’s dividend history speaks for itself. The company has increased its payouts for 62 consecutive years, making it a Dividend King, a feat that requires an incredibly robust company. Investors can be confident that Johnson & Johnson will continue to deliver solid returns and growing payouts for a long time to come.
The stock is trading at a forward price-to-earnings (P/E) ratio of 13.8, compared to an average of 18.5 for the healthcare sector and that of the S&P 500 is 21.4 (as of July 5). Johnson & Johnson appears fairly valued at current levels.
2. Medtronic
Medtronic, a giant in its own right, is a medical device company with a strong presence in more than 150 countries worldwide and a product portfolio that routinely earns new approvals or label extensions. While things took a turn for the worse during the depths of the pandemic, the company has recovered somewhat, although revenue growth remains sluggish. Medtronic is still looking to solve its top-line growth problems. The company had plans to separate its patient monitoring and respiratory intervention businesses, which it ultimately reversed.
Fortunately, Medtronic can take advantage of several growth opportunities, although they may take some time to materialize. One of them is artificial intelligence, which the company is implementing in several business lines and products to increase the productivity and performance of some of its devices. Another major growth area for Medtronic is robotic-assisted surgery (RAS). The company has been developing a RAS machine for years to compete with the leader in the field, Intuitive surgery. While Medtronic’s device, the Hugo system, has yet to receive regulatory approval in the U.S., it is working toward that goal. Medtronic estimates that the RAS market is severely underutilized. Last year, the healthcare giant found that only 5 percent of surgeries that can be performed robotically are currently.
Another key growth area for Medtronic is diabetes care. The number of people with diabetes has been increasing over the past few decades. The company is developing innovative insulin pumps to help diabetics better manage this chronic condition. The company has a great opportunity to serve the growing population of diabetics in regions with less access to healthcare. Medtronic should capitalize on this (and other) growth opportunities and deliver consistent financial results as it has done in the past.
Additionally, Medtronic also has an excellent dividend track record. It’s approaching Dividend King status, with an active streak of 47 consecutive payout increases. That makes it an excellent stock for income seekers, especially while the forward P/E is a reasonable 14.2.
Should You Invest $1,000 in Johnson & Johnson Now?
Before you buy Johnson & Johnson stock, you should consider the following:
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Prosper Junior Bakiny has positions in Intuitive Surgical and Johnson & Johnson. The Motley Fool has positions in and recommends Intuitive Surgical. The Motley Fool recommends Johnson & Johnson and Medtronic and recommends the following options: long Jan 2026 $75 calls on Medtronic and short Jan 2026 $85 calls on Medtronic. The Motley Fool has a disclosure policy.
2 Healthcare Stocks You Need to Buy Massively This Month was originally published by The Motley Fool
