Stock Price Analysis – Johnson and Johnson (J&J) at market price of $64.45 is tr

Stock Price Analysis – Johnson and Johnson (J&J) at market price of $64.45 is trading at Price/earning(P/E) multiple of 13.48x of its 2010 trailing diluted EPS of 4.78. While most of its peers i.e Abbott labs and Novartis are trading at premium comparatively at 18.7x and 14.6x respectively. to J&J. So based on the relative valuation approach, J&J at the time is undervalued stock and could generate average return in the near term. With market value of $173 billion and 3 months average volume of 12,022,500 , the stock also ensures good market capitalization and enough liquidity in the stock to provide opportunity to investors to exit as per their sweet will. Apart from that stock is less sensitive compare to index having beta of 0.55. It ensures it would not correct significantly even overall index correct sharply. For that the stock never broke the level $57 in last one year and maintained a range between $ 57.50-68.05 proving the above statement. So investing in this stock would preserve your capital in this volatile market and looking at current turmoil in world equity market it is advisable to invest in such defensive stock. Stock Price Performance Historically stock remained very defensive preserving capital for the investor rather eroding it. Stock traded at the levels of $62 in last 5 years monthly average reflecting that stock is very strong at the present level. Further company is engaged in the business of health care which is a defensive sector and free from the impact of any downturn in economy. This implies that investors have confidence on the stock and they knew investing in this stock would preserve their capital in future which is very essential in this uncertain environment. Below is the monthly price chart of the stock for past five years.